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Debt- Pay off Early or Not

Debt- Pay off Early or Not

February 09, 2023
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Debt – Pay Off Early or Not

Debt. It has increasingly become a growing pain point for almost everyone. According to Experian, at the end of 2021 the average US Consumer debt was slightly above $96,000. It is no wonder that this has been a hot topic for quite a while.

We live in a capitalistic society that has seen an increase every year in consumerism. Everything is becoming a subscription and it feels like if you don’t have the next best thing you’re being left behind.

There is no blame being put on anyone here, except for maybe the companies pushing out all their products to entice everyone to buy them. However, that’s a topic for another day.

When it comes to debt repayment, there are countless ideas out there on what’s the best process to follow and who can do it quicker than the next. That’s not what we are going to get into here. Those strategies require more personal conversations.

What we are going to explore is when it might make sense to pay more than the minimums on our debts.

One of the first questions you should ask yourself is; do you have a cash reserve built up?

If you don’t have enough cash on hand to cover 2 – 3 months of expenses, does it really make sense to give more of your money away to someone else? Imagine for a minute, you’ve been paying an extra $300 per month for the first six months of the year. On month seven, you find out you need to replace all of your tires and that’s going to cost $1,200. $1,200 you don’t have. Do you think you can go back to the company you paid an extra $1,800 to and ask for them to pay the $1,200 for you because you gave them extra for the last six months?

Another question to think about; do you have proper income protection in place?

This question goes hand in hand with the previous one too. A cash reserve is important to navigate any problems that come up and also to take advantage of opportunities that present themselves. Protecting your current and future income comes down to a couple different areas. Liability (being sued), disability (too sick or injured to work), and life (passing away during your working years).

If you’re able to answer both of those questions with a resounding “Yes!”, then it might make sense to use one of those debt repayment strategies out there to tackle it faster.


Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 3040 POST OAK BLVD, SUITE 1150, HOUSTON TX, 77056, 281-2202700. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Rethink Wealth LLC is not an affiliate or subsidiary of PAS or Guardian. CA Insurance License Number - 4172046. Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.