4 Tough Debt Questions Answered

Debt is no picnic, but it doesn’t have to ruin your life, either. If you’re one of millions of people in America dealing with debt, you probably have some questions. Read on for four of the most common queries and their answers.

1) How Do I Figure Out Which Bills to Pay Off First?

This depends very much on your living circumstances and bills.

There are two types of debt: secured and unsecured. The former is the kind of debt incurred when you purchase an item that typically carries and retains some value; for instance, a vehicle or home.

Unsecured debt is debt that has no asset attached. It may be money you owe for a service/intangible product, like credit card bills or student loans.

Those in a situation in which they could lose their homes and/or cars should pay these bills first. However, if you rent your home or own your car free and clear, you should pay down the debt with the highest interest rates first. Credit card bills almost always fall into the “high interest rate” category. Eliminate that debt ASAP.

2) What is More Important: Building an Emergency Savings Account or Paying off Debt?

This is a tricky question, but the answer is usually to build an emergency savings account. The money in your savings is free and clear of interest. That means that if you have to borrow it from yourself, you won’t be paying more in the long run, because there are no applicable interest rates.

On the other hand, when we have an emergency, we often turn to credit cards. Guess what? Credit cards carry enormous interest rates that average around 19 percent! This means that you aren’t only paying off the money you borrowed for the emergency, but also the interest.

3) How Can I Find Out is Debt is Affecting My Credit?

The easiest way is to get a copy of your credit report. Many companies offer official credit reports that are accurate and easy to decipher. Once you receive your report, you can dispute anything that you don’t think is your fault, and immediately start paying your bills in a timely fashion.

4) Where Can I Turn For Financial Assistance?

Financial management companies like Cavalry Portfolio Services can help you understand debt and eliminate it, one week or month at a time. If you need additional assistance in overcoming your debt and creating a plan of action, go online today to learn more about this company and similar businesses.

 

One of Mary’s favorite things to write about is finances. For more information regarding Cavalry Portfolio Services, please visit http://www.cavalryportfolioservices.com/

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