What is your relationship with debt?

We all have experienced good financial times. It can either be an inheritance, large refund check, bonus, investment return, or some other financial influx. When these experiences happen do you ask yourself or list out the debt you owe and what you’re going to pay on or pay off? If so, what a great start to declutter your mind and get down to some truth and honesty. But, let’s be truthful most of us have a horrible relationship with money. And, after all we are told debt is bad. And if we must carry debt, only do so when you buy a house, car, have student loans but get rid of it as soon as you’re able. Most experts encourages us not to pay off our debt because doing so could possibly create other concerns. I am sharing my experiences that if you’ve ever pondered on should you or shouldn’t you pay off your debt below are a list of pros and a heap of cons to consider.


~ Don’t owe any debt
~ Extra cash to spend
~ No stress or anxiety


~ Lose some benefits with getting rid of debt
~ Creating credit history i.e. student loans helps establish a history of making loan payments on time
~ Having tax deductions – more interest paid the more deductions based on the income phase-out
~ Feed your debt but starve your savings, or college fund
~ Make more money by investing
~ Lender will not resend the money

There is one misconception you must understand that the saying “all debt is evil”. Often people consolidate home loans with high-interest credit card debt, and this is referred to as clean vs. dirty debt. And, dirty debt MUST be addressed immediately! However, clean debt can be addressed in a long term perspective because paying off a mortgage early isn’t advised. And, a intelligent investment plan will less likely outmatch any saving plan that you will get paying off your home early. Yes, paying off your debt is the responsible thing to do, and paying it off early may be, the smartest thing to do in your case.

However, thoroughly consider the options by writing it down on paper the results of paying off your debt early. And, develop a plan that will clearly address the pros and cons of paying off a loan early, because you don’t want to have regrets.

Check back with us monthly to read and share our financial and accounting tips that will surely make you a savvy financial business owner.