What debt to pay first?

2nd Nov 2009 by Michael Haltman

Generally, there are two answers to this question. The first would be to pay off the most expensive debt. That is, which debt has the highest interest rate and therefore the highest cost to me. While that is the simplest answer, it may not be the correct one. There are debts that people have which are critical to stay as current on as possible. This is because being late on this debt can have ramifications. The first would be that being late on payments will be reported to the credit reporting agencies, and will have a negative effect on your credit score, the magic number by which someone's credit worthiness is rated. This affects your ability to borrow in the future. Along the same vain, it is important to stay current with those companies that can pull your line if you do not pay, such as home equity or a bank line. Suffice it to say that all bills should be kept current, but in the current economy sometimes you may have to pick and choose.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com