The Faster You Get Out of Debt, The Better Off You’ll Be
August 6, 2007 by Miranda Marquit
Filed under Debt Management, Personal Finance
One of the big financial planning trends right now is debt management. People seem to be drowning in debt, and the management of said debt is a quite lucrative industry. But the fact of the matter is that if you want to truly build wealth, you have to do more than manage your debt. You have to get out of debt.
In many cases, debt management involves shifting debt about, trying to lower monthly payments (and hopefully interest rates), in an attempt to make it “easier” to get out of debt. Sometimes, these debt management programs actually spread out how long you have the debt, in order to accomodate friendlier payments. The better option is to get out of debt as fast as you can.
Getting out of debt fast requires that you have a debt plan. You need to create a plan that shows your income, as well as details how much of it is available to use to pay off debts. And you need to look at your spending to see where you can cut back (fewer trips to the movies, more homemade meals, etc.). Then develop a plan that allows you to put extra money toward your debts. You’ll pay them down faster, pay less in interest and be on track to build wealth more effectively.
Hi Miranda - Welcome to the Business Channel! I love your blog already. I will visit often. I thought I would get you started on receiving comments. Please let me know if you have any questions! I look forward to getting to know you! Have fun!
hi Miranda yes. I’m going through it right now. I’m wondering if I should drop my Spanish, Career Planning and Computer Class and get a job during the time I would be in class to have more income to pay off debt faster. What do you say?
If you are working on a degree or a certification, you should finish it through. Debt for education (provided you aren’t wracking it up at an overly expensive school) is thought of differently than consumer debt. If you are working on obtaining marketable skills that can improve your financial situation in the long run, that should be a priority.
Unless you are literally at the breaking point, where you will become insolvent, keep with your education/skills development. Cut back on spending where you can, and finish your certification or your degree as soon as possible. Then pay off your debt faster with a higher income.
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Student loans can be crushing for many. Thanks for sharing this program that could help some people.