With the new year well underway, many Tennessee residents may have already abandoned some of the resolutions they made while others struggle to stay on track with meeting their goals. Financial resolutions and finding debt relief often make the list of individuals’ intended goals for the year. However, many may feel overwhelmed and uncertain as to where to begin. Therefore, first understanding their debt could play a key role in determining the best courses for management.
While there is often talk of good debt and bad debt, many concerned individuals know that significant credit card debt falls under the “bad debt” category. Unfortunately, many parties may continue to accumulate credit card debt due to being unable to handle their already daunting financial situations. They may feel that putting money toward other debt, such as mortgages is more important.
Mortgage debt, however, is considered good debt and continuing to make mortgage payments while paying off credit cards in their entirety instead of vice versa could be a positive strategy. Credit card balances tend to have high interest rates while mortgage interests are lower, so paying off credit card debt could lead to less money being owed over time. However, each situation is different, and different options should be looked into in order to assess individual circumstances.
Finding debt relief is a common goal for many Tennessee residents, but the ways the relief is found can often vary. Therefore, the more an individual knows about their particular circumstances and the options available to them, the more likely they may be to find a helpful route. Relevant state and federal laws can often provide reliable information that could help an individual better assess their financial situation.
Source: ABC News, How to Tell Good Debt From Bad Debt, Ted Schwartz, Feb. 3, 2014