Debt, Dollars & Sense

When it comes to paying down debt, the hardest part is facing the reality of it: that the money you're making today isn't yours; it belongs to your creditor(s).

The second hardest part is deciding what to do about that. 

It's easy to feel like you're falling behind as the stock market is going up. What if it takes four years to wipe the slate clean? That's four years without socking any money away.

Should you learn to invest? Wouldn't the profits help pay off that debt?

Why not buy a rental property? Couldn't the resale money pull you out of debt with cash to spare?

A search on this topic reveals a consensus among experts, which should give those in debt more confidence in making choices.

The bottom line: If you have bad debt, get rid of it before putting money into anything else. However, there's a big exception to this rule: don't ignore your company's 401k offering. If your employer offers a match take it. That's free and pre-tax dollars. If you have good debt (think mortgage), then investing can be a larger focus.

See the Sources: I added three articles on debt vs. saving here -- AOL Debt Management

How are you doing with your payoff? Any snags? Questions?

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• #3 Comment from babysaronna02 
  11/24/06 2:26 PM | Permalink

  I am trying to get my debts under control. I just had a nice talk last night with my boyfriend and he suggested to me that when I get paid I should use almost all of it to begin paying down my debt. My only problem is that I live in hawaii and also live with my mom who wants $400 a month for rent and utilities. I always tell her that I can't pay her that much until my debt is reduced to almost 0. She always tells me that I do not need to worry about my credit right now because Im still young(im only 24). My mom always makes me feel guilty when I tell her that I can only give her so much for a certain month. She tells me that she don't know how she will PAY HER BILLS if I don't give her the whole amount.
  
  I just don't know what to do in this situation. Should I just tell her that I am going to pay my bills only or should I remain in the situation that I give her my money to pay her bills.
• #2 Comment from editoronmoneyEntry Author 
  4/18/06 11:22 PM | Permalink

  You're debt-free? That must be a great feeling! Congratulations! I suppose it's much easier to follow smart money rules after digging yourself out on your own. You're in the minority -- but -- are also helping to pave the way for others.
• #1 Comment from linmarco 
  4/13/06 3:08 PM | Permalink

  When I think of debt I think of credit card debt. With credit card
  debt the interest is at the heart of the problem. It makes the cost of what you buy, besides using s card, higher.
  Credit cards are cash cows for banks and other lending institutions. For most of them it's almost a license to print
  money.
  Here are some rules for people heavily in credit card debt.
  1. Do not use a credit card to buy anything unless you intend
  to pay it off in full upon receiving your statement.
  2. If you must use a card and pay it off in installments try
  to get rid of the debt in no more than three installments.
  3. If you see you cannot pay the debt and begin to fall behind
  seek counseling. Be sure to seek the right one. Any agency
  wanting upfront money is probably crooked. Avoid them like
  the plague.
  4. Once you pay off your credit card debt go back to rule 1.
  BEEN THERE AND DONE THAT. DEBT FREE AND INTEND TO
  STAY THA WAY.