According to a study recently conducted by Ohio State University, consumers are not paying off debt as quickly as they once were. In fact, some younger Americans often pile on so much debt between credit cards, student loans and other financing that they won’t be able to pay it off until they’re 70 or older! That’s a long time!
Of course, there’s nothing wrong with loans and credit cards. In fact, there are many benefits to using them when building a strong credit history. But it’s important that you pay them back in a timely manner in order to keep your credit in good standing and to save some money.
Your best investment is to pay off high-interest debt. Since the average loan has a higher interest rate than the average savings or investment account, this will allow you to save more money in the long run. By paying off your highest interest-rate debt first (usually credit cards), you’ll be able to take an entire bill off your monthly list and have more money to contribute to other loans or savings. Just think of how much better your paycheck will look with one less bill to take out of it!
Use EECU’s “Paying Off Loans” Worksheet to keep a list of your loans’ interest rates and begin working more aggressive debt repayment into your monthly budget. When you’re 70 and your loans are long gone, you’ll be glad you did!