Money Myths That Can Make Your Debt Situation Worse
Most of the time, it's a good idea to listen to age-old advice. When it comes to your finances, though, you might want to think twice, caution Atlanta bankruptcy attorneys.
It's not that there's anything wrong with long-held personal finance beliefs, like the idea that you should pay down debt before saving up. It's just that even the most classic wisdom can backfire in certain circumstances, according to a recent article by TheStreet.
The problem is that everyone's financial situation is different.
Let's pretend that you have a few debts with reasonable interest rates, and that you have no problem paying the bills every month. The generic advice is that you should put your money towards lowering debt before you build up a savings account, invest for your retirement, put a down payment on a house, etc. But in reality, your debts may not be doing as much harm as you've been told. All of us need some debt at some point - from car loans to credit cards - to build credit. And if yours is manageable, you may be better off saving your money for the future (ideally in a combination of liquid accounts and higher-yielding investments) than putting it towards reducing debt.
However, many Americans wind up with debts that they can't manage. Whether it's a credit card bill (or several), medical bills or tax debts, you know you're in trouble when your interest rate is so high that your balance keeps growing out of control - even when you make regular payments. And until you take action, interest, fees and overall financial stress will be ruling your life. In this instance, your best bet is to lower debt before making any other financial moves. In fact, you may not be able to do anything to help your finances until you lower debt.
Fortunately, this is where bankruptcy comes in. If your debts have gone from helpful to hurtful, filing for bankruptcy can reduce debt to get even the most fuddled of finances back on track. As always, the right path for you depends on your individual situation. So why not sign up for a one-on-one debt analysis with a knowledgeable and professional Atlanta bankruptcy attorney? At DebtStoppers, we can help put you on the path to financial freedom.