Bankruptcy & Foreclosures

With the New Year on the horizon, this is perhaps the best opportunity of our annual swing around the sun to get our act together in terms of debt management. I would like to take this opportunity to reiterate some of the debt management practice tips that yield immediate gains.

1) Don’t be quick to pay off good debt.

Remember that student loans and fixed rate mortgages are examples of debt that you may not want to chip away at quickly. Assuming you have a low interest rate, the tax benefits often justify keeping these loans around.

2) Start by paying the high interest loans first.

Focus on paying down the balances of bank loans or credit card debts that charge the most interest until they are knocked down. Maintain paying at least the minimum due on all your other debt while chunking down the high interest balances.

3) Now is the time to destroy your cards.

With the Holidays behind us, this is the time to consider taking the scissors to the ol plastic. This forces us into paying off the balance of all of the gift shopping we racked up without allowing us to add new charges to the equation.

4) Don’t look at just the minimum payment due.

Remember that the minimum payments barely cover the interest you are being charged. The only way to truly get the jump on your debt is to pay as much as you can afford each month.

5) Have an escape plan.

The instable housing market means that getting cash out of the home’s equity is going to be more difficult than usual. For 2008 it would be wise to plan on not having to rely upon such measures to make ends meet.