Managing Debt

Some Quick Tips for Managing Debt Effectively

    Almost everyone has to borrow money at some point, but Cornerstone recommends you do so only for more permanent assets, such as real estate and education. You should NEVER borrow money on lifestyle goods like expensive televisions.  Major categories for borrowing money include long-term (a mortgage, student loans, auto loans) and short-term (credit cards).

    To determine what type of debt is best for your particular need, consider the following:

        Interest rate: fixed or variable

        Time period

        Tax advantages of some borrowing

        Teaser rates (and how long do they last)

        How difficult is it to undo your decisions?

    Borrow effectively and repay loans efficiently. You can do this by:

        Ordering your debt from highest rate to lowest rate: pay the highest rate FIRST.

        Don’t pre-pay too aggressively just to be debt free.

        Have two different credit cards: one with a low rate for making major purchases and one that will help you earn points for rewards easily.

    <Monitor your credit score> to make sure your decisions and efforts are enhancing your long-term financial health!