Debt Myths That Can Hurt Your Finances
We've all heard the classic financial advice a million times: pay down debt first, buy rather than rent, and invest as much as possible in your work's 401k.
But even the most trustworthy and time-tested tips can be wrong in the right situation - especially when it comes to debt, according to TheStreet. So how do you know what works best for you? Chicago bankruptcy attorneys have the tools to help you find out.
Let's say you have a few relatively low-interest debts that you know you can afford to pay each month - but you don't have much in terms of savings. Classic wisdom would hold that you should pay off your debt first so you don't have to deal with interest. But the truth is, all debts aren't created equal. In fact, loans for everything from homes and cars to the computer you bought at Best Buy are the way most of us build credit (assuming we make our payments, of course!). If you can juggle a few debts, you may be better off putting your money towards your future by starting an emergency fund and/or investment portfolio.
It's when your debts are unmanageable that you get into trouble. If you somehow wound up with high-interest debts that you can't afford - from credit card bills to IRS penalties to medical costs - you might not be able to move forward until you pay them off. Too much debt will not only zap money from your wallet with interest and fees, but also wreak havoc on your credit, your relationships and your sanity. In this case, you'll likely save more money by lowering debt than you would with even the most rewarding investments.
Sometimes it's a hard line to define. We all need some debt to live out our American Dream (I mean, how many people can actually walk into a car dealership and pay cash for a vehicle?) yet having too much debt can crush those dreams. If there's a good chance debt is to blame for your financial rut, don't live in denial - find a fresh start! Filing for bankruptcy can lower or eliminate debt; in many cases, you'll feel the financial relief immediately. At DebtStoppers, our Chicago bankruptcy attorneys can analyze your finances and determine whether there's a bankruptcy plan perfect for you. Why not visit our informative website today - and sign up for a free one-on-one personal debt analysis while you're at it?