Over the last 7 years I have seen over 3000+ client credit reports, and a few consistent observations stand out to me. The topics below may not apply to you, but perhaps they apply to someone you know - feel free to forward this email to them as well!

**Disclaimer: Pay your scheduled debt payments on time. The topic of this email is making EXTRA payments to pay down your debt early.**

People are excited about paying off their debt early - and this is an exciting thing! However, there may be better uses for your extra money than just paying off your debt early!

1. If you have a very low rate, and you can afford the payment, maybe the money would be best used elsewhere? Such as:

- Paying off the highest rate debt. Focus on the credit cards with double digit interest rates, then slowly make your way toward the lower interest rate debt. If you have debt with interest rates below 4%, there may be other places for you to invest your money since the debt is so "cheap"!

​

- Saving for a down payment for a house. Homeownership is an amazing way to build wealth for your family. If you are spending your down payment on paying off debt with a really low interest rate, you may want to reconsider!

- Placing the money in a 5% yield savings account. There are high-yield savings accounts that will pay you a high rate of return to park your money with them!

- Invest in a stock market index fund. The stock market on average has provided a rate of return of about 8-11% depending on how far back you look - this rate of return out-earns how much low interest rate debt costs you! (This email is not investment advice, but an encouragement to consider your financial plan with a financial advisor, or do your own further research 😊)

2. Avoid using your emergency savings: be careful to not use your emergency savings, it should cover about 2-6 months of bills, because if you fall on hard times, you’ll need to go back into debt again anyways, at probably a higher rate.

3. If you pay off a collection and it reports with a $0 balance, your score will usually NOT go down. Use your money as leverage, only pay off the collection if the creditor agrees to “delete” your collection from your credit report. This is a very common thing I see on credit reports- $0 balance collections that are still dragging down a client's credit score.

Want to chat more or review your credit profile? I would love to set up a time to chat! Just shoot me a text! 414-488-0438