#WHICH BILLS TO PAY OFF FIRST HOW TO#

Revolving credit card debt is poisonous to most consumers. Then you can turn to interest rates.Īny debts that require you to pay double-digit rates, such as credit card balances, should stick out. Regardless of whether you consider yourself a “pay yourself first” or “all debt is bad” person, you’ll want to make sure you’re putting at least enough to meet minimum payment requirements. List your balances, your minimum monthly payments and, most importantly, the interest rates you’re paying on each balance. Most people have a spectrum of debt: college loans, car payments, a few credit cards, maybe a mortgage. Start off by taking a long, hard look at your debts. Follow these five simple steps to figure out the right course of action for yourself. “You’ll be paying bills for your entire life you might as well take care of yourself first,” says John Thomas, a retiree in Cambridge, N.Y.Īs always, the truth is somewhere in the middle, and where you fit in that middle ground depends on your circumstances. So why pay down a 3% mortgage and throw away the chance at higher returns? The math becomes even more persuasive when you consider tax deductions for mortgage interest and the potential for decades of compound investment growth. The S&P 500 has a long track record of earning roughly 7% returns over the long haul when you account for inflation. The pay yourself first faction offers their own simple rule: If you can invest the money and earn a greater return than the cost of debt you are paying, why not save for retirement first? Pay yourself first-ers believe there is “bad debt” and “good debt.” A personal bank loan with an 11% interest rate is hardly in the same class as a 3% home mortgage. They argue that not all debt is created equal. 9 Tips For Paying Down Debt In RetirementĮqually as passionate is the group we’ll call the “pay yourself first” believers.

#WHICH BILLS TO PAY OFF FIRST HOW TO#

How To Fix America’s Retirement Crisis: 10 Experts Weigh In.How To Get Out Of Debt Before Retirement.America’s Seniors In Debt: A Growing Problem.There are legitimate reasons for this point of view-and from a behavioral standpoint, it’s a simple rule that’s easy to follow. They’ll tell you to pay off your credit card balances, car loans and even your mortgage as soon as possible. When you ask for advice on whether you should pay off debt or save for retirement first, you’ll quickly encounter the crowd that thinks all debt is bad. How to Pay Off Debt and Save for Retirement That said, there are a few useful guidelines to follow, and the answer that’s best for you might not be as obvious as you think. The answer should always depend on an individual’s financial situation and their emotional relationship to money. That’s good, because it’s a very personal decision. When you have extra money at the end of the month, should you pay down debt or bulk up your retirement savings?Īsk this question at a party of financial advisors and you’ll get as many different answers as there are attendees.

Which bills to pay off first