by Nancy Osborne, COO of ERATE®
Sep 10, 2007 - Think you're drowning in too much debt? If you can't comfortably pay it all off before you're ready to retire then you probably are. You should also be able to continue saving for retirement while you are in the process of “retiring” all of your long-term debts. If this sounds impossible to accomplish then you have debt overload and need to take corrective action to free yourself from the cycle. The amount of debt that you take on should be based on your age as well as your annual income. By the time most Americans reach their forties they have accumulated long-term debt equivalent to 3 times their annual income. This debt is then slowly paid down but still averages 1 to 1.5 times their annual income by the time they've reached their sixties. We as Americans need to wean ourselves from long-term debt and stop the cycle of over-consumption if we hope to retire debt free in our sixties. The goal should be to maintain an amount of debt equal to 1.5 times your annual income once you've reached your forties and to continue to reduce, and not add to, your debt from that point forward.Refinance at Today's Low Rates!
There is a relatively simple thing you can do to improve the quality of debt you currently have that will help you to eliminate it more efficiently and increase your tax advantage. The place to begin is with your home. While your home equity should never be used as a cash register for making frivolous consumer purchases, converting high interest non-deductible debt into a home equity line of credit (HELOC) makes sense on many levels:
Always consult with your tax advisor regarding your own individual circumstances.
Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.
"I am addicted to Bloomberg TV" says Nancy.