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Debt: Friend or Foe?

The first word that usually comes to mind when discussing debt is "Ugghh." I'm not sure if it's an official Webster word, but everybody knows its meaning. While debt usually begets stress, sweat, sleepless nights and aggravation, there is two sides to every coin. Debt also has its good side: just think about where you are as you read this article: would you be there if you did not get a loan to buy your house? Did some nice bank extend you a loan to buy the car in your garage so you can happily go to Fry's or up to the Clubhouse? They say there are two (three?) sides to every story: have you stopped to see the other side of debt?

Most of the debt we associate with are mortgage, car loan or lease and credit card debt While we feel that we get offers every week to shove another credit card into our wallet, think about this offer: a complete corporate stranger is willing to give us money with the promise on our side of paying them back on an honest, regular schedule. Think of yourself going down the block, picking a neighbor you have never met, and offering them to borrow money from you at a modest rate of return... would you do it? Think of all the homes in Seville: many or most co-owned by a bank, who has never seen the house since the pre- closing inspection. Would you be willing to be on the other side of the loan, being the giver instead of the receiver? It really is quite an "honor" to receive a loan from any of these loaners: we forget what the other side looks like- but here comes the foe part- after the pleasure of extending the debt and the smile, you have to pay it back. Ut seems debt creeps up on us silently and we are unaware that it' coming. The fat is, ignorance is bliss... until the bills come and we have to scramble to pay for the purchases. So, how to deal with it>

There are varied thoughts on how to organize the paying off of debt. Some will prioritize it by interest rate, paying off the highest rates first. Others will line them up by balance (usually my preference) and cut from the bottom, paying off the smallest balance first and working the way up. Mortgages are a different story- a deep analysis should be done keeping in mind that if you pay additional principal each month, it may shorten the lifespan of the mortgage but in a fixed mortgage will not decrease the monthly payment. It may be psychological, but when you pay off a debt, it feel like a great accomplishment, and voila- one less bill to pay. Either way you do it, the important fact is to get it zero and keep it at zero. Most will end up in the same place 3 years from now, and the whole process starts again, along with the stress and anxiety of. So, do yourself a favor... organize your debt, prioritize it, make a plan, and stick with the plan. Do NOT repeat. If you have less debt, you have more time to relax, spend time with the family, and smile, smile, smile! See you on the tee...

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