Debt Component of your personal financial model

Besides Protection, Savings, and Growth on our P,S,&G model there are 2 other areas of interest. The first is debt.

Debt consideration and options have to be carefully compared and factored with all financial areas considered. The economic and the emotional impacts should all be factored into a decision to see which are most important to those involved. Most people want to be debt free at some point. The question is what is the best way to get there when you include all other aspects and desires of your financial life. In some cases even though there may be a desire to have a mortgage paid off in 15 years a 30 year loan could have more benefits. It would have a lower payment which frees up cash flow for other things or is less of a burden if the unexpected happens. It also could provide additional tax benefits. In most cases you could pay the 30 year mortgage off in 15 years if you choose. In business if the incoming cash flow from an investment is more that debt payments there may be reason to not pay off the loan early all things considered. Perhaps that extra cash flow could be used to finance another business opportunity. There are many things to consider when addressing debt in your financial life. It isn’t always as simple as paying off every debt as quickly as possible.

 Take care,

 Bob