Determining What Debts to Pay Off First
When you are in debt, it can seem overwhelming at times. There’s only so much money to go around, and figuring out where to put your funds first can be confusing. If you are wondering which debts to pay off first, this list, created by a bankruptcy attorney in Tampa, is for you.
Debts to Pay First According to a Bankruptcy Attorney in Florida
Good Debt Versus Bad Debt
There is a difference between the type of debt you have accumulated. Good debt is described as anything that can improve your financial situation. For example, a house or student loan is good debt. This is because owning the house or having an education improves your financial standing. Debt that can’t be paid off in a month or two, and does not improve your financial standing is bad debt. An example of this would be credit card debt used for a fancy meal or a vacation.
You always want to pay off bad debt first. It will not help you in the long run to ignore bad debt.
Small Versus Large Debt
If you can pay off your smaller debts first, that will make things easier for you financially. The sooner these things get paid off, the better it is for your financial standing. If there’s something you can pay off quickly, take care of that first before you tackle the big stuff.
It’s not a bad idea to consult a professional and find out what debts it would benefit you to pay off first. This has a lot to do with your interest rates. You want to determine how much extra you would be paying if you waited on certain debts, versus paying them off first. This can definitely be a complicated process to figure out, but if you sit down and take the time you will find that you can save hundreds to thousands of dollars.
Consult Your Budget
If you have debt, you need a budget. You should be budgeting for every item that you spend money on so that you have a realistic picture of what you can afford when paying back your debt. Without a budget, you are flying blind when it comes to repayment.
Once you’ve consulted your budget and set your priorities, there are instances in which you just cannot realistically pay back your debt. If this happens, consult a bankruptcy attorney in Tampa to determine your alternative options. A bankruptcy lawyer will be able to advise you and help you find out what you may qualify for and the best route to take to get you back on track.