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The Frugal Duchess hosted Carnival of Debt Reduction #29, and this week’s Flashback comes from Mighty Bargain Hunter: Which debt to reduce first?
If debt isn’t producing income, it’s usually best to pay it off ASAP. But getting a debt completely out of the way, especially an amortized debt with a fixed minimum monthly payment like a mortgage, frees up a ton of money for other purposes. The two debts in the article were two mortgages. In most cases, mortgages aren’t the worst kinds of debt to have, but the payment does need to be made each month until it’s paid off. Once it is paid off, then it’s gone, and this could be hundreds or even thousands of dollars per month that could be put to other uses.
So, paying off non-performing debt is good, but paying off the debt that frees up your money the quickest should be given some consideration.