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Tips to Consider Before Paying Down Mortgage Loans and Unsecured Debts


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Say you suddenly received a windfall (lottery or inheritance) or received a pay rise/bonus at work, and you decide to pay down home mortgage, car loans and even better, the financially sapping credit card debts.

I have to congratulate you for choosing to resolve any of your debts instead of blowing it on a holiday trip, plasma TV or new clothes. But before you pay down debt, here are some other things to consider:

1) Make it a point to contribute every dollar to your company's retirement savings plans. This is especially useful if your employer kicks in money when you contribute. A retirement savings plan allows you comfort in your twilight years while deferring income taxes on the saved money and interests until withdrawal.

2) Set aside an emergency fund equal to about three months’ expenses, so you can settle house, family or personal bills immediately without resorting to more borrowing in the event of illness or disability. If you don't have an emergency fund, then you are living dangerously on the edge. Emergency funds are an absolute necessity for financial security, get started today.

3) If you qualify, put money in IRAs. Most people invest in a Roth IRA as they are not tax-deductible. Withdrawals are tax-free.

4) If you have other goals such as children's education, are you saving money regularly for that? It can be zero-coupon bonds, savings bonds or a special trust fund, etc. which are specially created for that purpose in case you stray off that objective.

You may be inadequately prepared for the above items but they are areas to put your money when they are in abundance. Else, paying off debts take precedence over your worldly indulgences.

Jeff is the editor of Jeflin's Investment Blog. He writes on stocks, market trends, commodities and properties in his blog. Please visit


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