Have you ever owed anyone money before? Didn’t it place a burden on you? Owing someone money will always bring that cloud over your head and keep it there. It is not a good feeling. Who you owe the money to will also make a big difference.

If you owe twenty dollars to your friend, probably interest free, you may feel less obliged to pay it back right away than if you owe a thousands dollars to an uncle at a 10 percent interest rate. It is not often that you borrow large sums of money from family and friends.

The money you owe to family and friends is nothing compared to larger debts with higher interest rates that are not borrowed from family or friends. One of the worst is credit cards. They can have huge interest rates which cause the debt to pile up faster and faster.

Should you pay your debt off? Yes. When it comes to financial management, paying off your debt should be top priority. One of your life long goals should always be to pay off all your debt. Debt grows faster and faster the more you have.

One common argument is that a mortgage is okay because you get the tax deduction. A mortgage is okay, but you should still strive to pay it all off even if it takes the 30 years you originally planned. You can only deduct the interest paid, and not as a credit. If you didn’t have the mortgage, you wouldn’t have to pay any of it.

For example, if you paid $2,000 one year in interest on your mortgage and you are in the 15% tax bracket, you only get to save 15% of the $2,000 which is $300, not the whole $2,000. It’s a limited amount of savings and you should not prolong mortgage expense beyond what you original set it up for.

Another reason people say you should have a mortgage is that you could invest the money that you haven’t put down on the house and invest it at a higher rate than you are paying. Sure, this could work, but how many people actually have all that money put aside right now and how many would actually invest it like that?

All other debt should be paid off as soon as possible. Credit cards, auto loans, personal loans, student loans, etc. should all be paid off right away in order to save money and start saving for things you really want and need.

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