Debt elimination plan, strategies and experts - do they know : Bad Credit Advisor

Debt elimination plan, strategies and experts - do they know

what are they talking about? If you listen to any debt elimination commercial, you think that the idea to eliminate debt should be on every one's mind. His plan works, her program works better, and so on. People like John Cummuta made fortunes selling information, which with a very little effort, can be found for free at your local library or on the Internet. But the point I am making here is before you rush to buy and start feverishly working to reduce your debt, stop and think a bit. You may come to the conclusion that this debt better be left alone. The times have changed, whatever made perfect sense just few months ago, could be a rather foolish thing to do now.

You have to treat every debt elimination plan which is pushed as cure for all you money trouble with caution. Why would you try to eliminate certain debts, if this requires putting most if not all of your free money into paying them off? It is much better to save some cash, instead of paying debts off, because once you pay debt down, it is gone. Sure, you can tap into your credit card or line of credit again, as long as the creditors let you. But what if you brought you credit card balance to $0, only to have bank saying thank you, by closing the account?

The dumbest thing of any debt elimination plan is to pay off your mortgage and live completely debt free. This is being preached everywhere, but just think for a second. You sacrifice and pay off your home mortgage of $120,000 in 3 years instead of 30, only to learn that its fair market value now stands at $100,000. Not only you just lost $20,000, but try to get some cash out when you need it. So you have no savings and no mortgage interest for tax deduction purposes, only the ever aging house that needs more and more money for repairs every year.

Everyone who has student loans are being now scared. Student loans must be repaid no matter basically what. Bad economic conditions make everyone nervous. Debt elimination experts now push one strategy - eliminate your student debt while you can. Sure, if you are currently gainfully employed and making $200 monthly payment on your $25,000 consolidated student loan, which you consolidated at 9.0% - you may definitely think of it. If the amount is relatively small and the interest rate is high, debt elimination may be in order. But no, every one should try to pay debt off as quick as possible. What about eliminating a $80,000 student loan which you consolidated at 3.5% and are only paying $360 per month. Doesn't make sense to do anything, does it? Why fork all your free money toward this loan, when you have a very manageable monthly payment?

Paying off car loans doesn't make sense in this environment either. Why, when you can get a car loan with no interest for 60 months. Your credit needs to be good, but that is beside the point. My point is do not blindly follow to every debt elimination plan, strategy and expert. You may lose much more money than otherwise.

Fri Mar 13, 2009 01:03PM by Tony | More in Debt Relief | Comments (0)

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