Debt Free News

Report: Mortgage prepay not the biggest step to get out of debt

January 22, 2007

What has come as not too shocking in debt free news today is that most all US homeowners do not find prepaying mortgages a big priority. Many of our readers have been in debt over their heads; some have successfully made their way back to the right side of debt, credit card debt, and other personal debt issues.

First, let us make a few points about setting personal financial priorities before we address the debt free news report released today about mortgage prepays. Are you a debt free site reader that has the ability to organize and create priorities if you do not have credit card debt? Many of our readers possibly earn less than $25,000 annually. So, that being said, there is not much leeway in a personal budget when less than twenty five thousand dollars is made each year. First, live within your means. If you have credit card debt – pay it off. If you charge something – pay it off in full every month when the bill is due.

The study shows that most consumers are more interested in paying credit card debt off than they are in prepaying their mortgages. The report states that even insurance purchases are more popular than prepaying a mortgage.

While most of the consumers interviewed in this study did state that they would love to be able to accelerate paying down their mortgages, many of them have no plan to get to this point simply because they do not know how to afford to do it. When interviewed one woman from Florida said that she simply did not understand where to start in the matter. Many financial planners interviewed agreed that prioritizing prudently is the fundamental nature of proper personal financial planning. In fact, those planners interviewed all the whole stated that the less money a consumer has, the more imperative prioritizing actually becomes. This comes with some sacrifice, but the reward a consumer earns by paying off their mortgage early is completely worth it financially speaking.

In the report, one financial planner pointed out that for most homeowners, accelerating mortgage payments should rank pretty low on the to do list. In fact, he goes on to say that most important priority for just about any person should be getting their future planned well – their retirement is vital and it takes proper and expedited planning. As the price of living will always go up in cost – retirement plans will have to reflect this in order to be planned properly. The report says that retirement is the most important, but the most prioritized by many working individuals.

Next, the report states that credit card debt is important as well. Eliminating interest payments is one sure way of freeing up money to add to one’s retirement fund. Actually, this debt free report says that any debt with high rates has to be a priority to get rid of in order to ever get the chance at a debt free lifestyle or any well planned financial future.

Additionally this same report states that possessing some sort of emergency fund is essential – even if it is not packed with money – something is certainly better than nothing. According to a financial planner that took part in this report, you do not want to consider prepaying your mortgage until you have been able to pay off credit card debt and other high rated debts.

As many of our readers can probably understand – mortgages most always have a lower rate than your credit card debt. Yes, the debt you owe on the mortgage is higher in most ever case, but the rate is stable as well if you have a fixed rate mortgage too.

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