Don’t Pay Extra On Debts
By Keith Bunn Jr.
July 22, 2012
For over a year now you have heard me say, “Pay down your debts!” Normally the way you do that is by paying extra on your debts starting with the smallest debt and working your way to the biggest. But there are times, paying extra on your debts doesn’t make sense.
Pay Minimum Payments only
When there is a foreseeable emergency in your future, it makes sense to stop your Debt Snowball temporarily and just save as much cash as you possibly can to prepare for that emergency. Emergencies like…
· Going to have a baby: Having a baby isn’t normally an emergency, but there can be complications during pregnancy and child birth. When both mother and child are home safe and sound, then you can take the extra money you’ve been saving and start your debt snowball again.
· Job loss: If your employer announces that there will be some layoffs in the near future and the chances that you’ll be on that list is good to great, then again, temporarily stop your snowball and pile up cash. Once you know you’re not going to be laid off or you did get laid off but found a new job, you can take the extra money you’ve been saving and start your debt snowball again.
· Medical issues: If you or someone in your family has been diagnosed with a disease or serious illness that is going to take a lot of treatments. It again makes sense to start making minimum payments on your debts and save money to help battle the issues that have come about. And once again, once the illness has passed, you can take the cash you built up (if any) and start your debt snowball again.
· Death: Unlike the previous bullet points, the death of a love one has to be treated a little differently. If the passing love one was a young child or spouse, our brains are just not working right because of the grieving process we would all go through and it really doesn’t matter who you are, it is times like this where anyone of us can make huge financial mistakes during our grief. In this case, it is better to stop paying extra on your debts and just pay the minimums for at least 6 months. Just give yourself time to go through the grieving process and once you can start thinking right again, you can continue with your debt snowball.
This week, I only have one question to ask. What other kind of emergencies can you think of that would make sense to stop your debt snowball, make minimum payments, and pile up cash?
I hope my posts inspire you to look at what you’re doing financially and if needed, make some changes that will cause you to win financially. I also look forward to reading your views on any articles or postings that I may post. For more money news, facts and ideas, follow me on Facebook, or Twitter. Thanks you!