5 Types Of Debts To Clear Off As Soon As You Can

The concept of good and bad debt is no longer a hidden secret of the rich. This is real and everyday people can apply this concept to aid their own personal financial management activities. While there are some forms of borrowed money that can help an individual to build wealth passively, there is also no doubt that some forms of debt can eat up your bank account in no time. These are 5 of them.

Credit card

The immediate debt facility we often think about when talking about money we owe is often the credit card. You really do not need a second opinion on why you should clear the outstanding balances as soon as you possibly can. Some cards can have an interest of over 20%. You don’t realize this until you are billed for them. On top of that, late payment fees and default penalties can also be a substantial amount when you consider how much is really due. Defaults and late payments also wreck havoc on your credit score preventing you from qualifying for the best rates on your mortgage. And if you are entertaining the evil though of drawing from a card to pay off another, please think thrice. You are just prolonging what will eventually come after you.

Taxes

The last entity you want to piss off is the IRS. People at the IRS are very dedicated in what they do. In fact, I wouldn’t be surprised to find if one of their employees performance indicators include how well they get defaulters to pay up or bring justice to them. And in addition to that the public who are obediently paying their taxes will always want to see fairness in the system. Meaning there is great public support to throw the book at tax offenders. Your employer wouldn’t be happy as well if they find that you are on the wanted list of the IRS.

Payday loans

Payday loans are probably the most expensive types of legitimized borrowing in the modern world. Interest can range from hundreds to thousands of percent in a year. But because people who take up these debts often borrow small amount, they do not feel the pinch. But that does not mean that you should throw away your cash just like that. Interest payable can compound faster than you can earn at work. You definitely want to clear this as soon as you have the means to do so.

Alimony

If you need any reminder of why you left your spouse in the first place, fall back on alimony and you will get a quick refreshment of what you are missing. When you do not pay them, you might find that there will always be something going wrong especially when dealing with government agencies. You got the divorce and you have to pay the price. Be a responsible adult and never fall back on these payments.

Everything that involve collection agencies

Debt collectors have made it a highly sophisticated art in making the life of borrowers hell. They send letters dressed like court notices, harass you when you think you have a little spare time, and they can even prank the marbles out from underneath you. There is a reason why corporations are willing to spend money on these experts just to get back what is rightfully due to them. And usually they are worth their price. Meaning eventually you will give in. You might as well pay up sooner rather than later to avoid all the stress they can bring you.