Fast or Slow? Best Way to Get Rid of Debt
When you’re talking with most people about their plans for debt settlement, there are a few true-isms about many of these people. One of these is that they don’t realize the perilous situation they’re in until they’re much farther in debt than even they are aware.
Another is that if you ask them they would say they have no real plan to settle their debts. A third is that they all want to get out of debt. Many will ask is the best way to get rid of debt to go fast or slow? There are only a few situations where slow is the way to go; here are a few of those situations.
Investment Income: If you have to pull out investment income that is otherwise performing well, you may wish to pay of your debt slower. If your investments are stinking up the joint, than you may wish to sell your investments and pay off your debt.
But make sure that you know all the penalties, fees, and taxes assessed on these investments before you sell anything. For example stocks held less than one year invoke pretty steep capital gains taxes. 401k’s often can’t be liquidated depending on the terms of your broker’s agreement. Make sure you find out all that’s involved before you sell any investments.
Fixed-Debt: Some of the debts we all incur (student loans in particular) seem massive and insurmountable. If you’ve got $100,000 in student loan debt and you’re just out of school making $40,000 a year that could seem like the first thing you should aggressively pay off.
However most student loan debt is fixed meaning that whether you pay it off slow or fast, you’re paying off the same amount. If you have taken private loans which are adjustable try to see about getting those into a fixed interest environment.
Health: If you have health needs which are going to trump all others, you may wish to keep as much expendable cash on hand as possible. If that means running up balances and not having debt settlement in the fore of your mind, then so be it. But you and your loved ones health should be paramount.
There are a few other occasions where engaging debt settlement slowly makes sense; but that’s not usually the case. Often as anything you want to pay off bills in as fast a way as possible.