How Quickly Should I Pay Down My Debt?
An expert perspective on a complicated question.
High debt can affect virtually every aspect of your life ‐‐ a fact that leaves many people feeling desperate to eliminate all outstanding debts and move on with their lives. Though this sentiment is understandable and even admirable, it is important to point out that there is no need for such a rush. Here at Madison Monroe and Associates, for example, we generally strive to put our clients on a one year path to financial solvency. Here’s why:
• Rushing to pay down debt can leave people struggle to make ends meet in the meantime. With a bit of foresight, depriving yourself in this manner simply isn’t necessary.
• Slow and steady payments allow for more financial liquidity ‐‐ for example, a savings fund that can be used for special purchases or in the case of an urgency.
• Life goes on, even when one is in debt. Spending ever spare penny on debt payments is impractical because most of us wish to continue investing in our futures by studying, making mortgage payments, etc.
• A one year payment plan is fast enough to prevent an excessive buildup of interest. It is important to avoid paying significantly more than your existing debt in interest payments, after all!
• By breaking your outstanding debt into twelve manageable pieces, you can enjoy the psychological satisfaction of seeing your debt steadily reduced. A positive attitude and strong morale are both crucial for anyone hoping to stay committed for the long haul!
• Making consistent payments for an extended period of time will grow your credit score faster than making one enormous lump sum payment ever could ‐‐ and this is very important because many people who suffer from debt also have credit problems.
Learn more about our unique and highly effective debt reduction program by contacting Madison Monroe and Associates online today!