Atlanta Residents Debate Whether to Pay Down Mortgage or Choose Bankruptcy for the Biggest Savings
Not worrying about your mortgage payment might sound like a dream come true - and with the low mortgage rates we're seeing today, now might seem like the time to pay down that home loan.
But, for most Chicago residents, paying off the mortgage early might come at a price they can't afford, particularly if they're dealing with large credit card debts and little savings.
As it turns out, a low interest rate is actually a good time to hold on to your home loan.
Sure, paying off more of your mortgage means saving that 5 or 6 percent interest rate (and even less, if you can write off some of those monthly mortgage payments on your taxes). But that savings won't mean much when you still owe 25 percent annually on several thousand dollars in credit card debt - not to mention that car loan or those medical bills. If you want to put your savings to work, put them towards the debt with the highest interest rate.
Now that doesn't mean it wouldn't be nice to own your house outright. And if you're bringing in good income, have plenty of life savings and zero debt, it might be financially rewarding. But most of us aren't there yet.
In most cases, eliminating the mortgage still wouldn't eliminate most of our troubles because those troubles stem from high-interest debts. Remember, the more interest you eliminate, the more savings you'll reap in the future. It also works in reverse. Let's say you've finally paid off that 25% APR credit card. Before you go doubling up on mortgage payments, maybe you should think about investing that money - whether it's in a retirement account, a high-interest savings account or the stock market. If you play your cards right, you can easily earn higher returns than you'd get by paying down your mortgage early.
And, of course, don't forget about that emergency savings - before you invest in anything, invest in yourself. Set aside a few months worth of income so that you can afford to handle almost any emergency, should one arise, and your finances will be better off if your luck runs out temporarily.
The fastest way to start saving money is to pay down debt - you can make it happen by vowing to pay more than the minimum each month, which ensures you'll cover more than just interest. So what if you can't afford upping your debt payments? That's when bankruptcy comes in handy. Learn more about the ability of bankruptcy to whittle away at debt, stop foreclosure and get your finances back on track with our free one-on-one debt analysis. At no cost, an Atlanta bankruptcy attorney can answer your questions, discuss your concerns and identify a bankruptcy plan that's best for you.