When Debt Repayment Plans Go Awry
So how could anyone argue that paying off debt is a bad idea?
I can, if you're approaching it in any of the following ways:
You're paying off the wrong debt. In the late 1990s, banks started pushing biweekly mortgage payment plans aimed at helping homeowners pay off their houses faster. By making payments once every two weeks, instead of every month, the homeowner would effectively make one extra house payment a year, shaving years—and thousands of dollars in interest costs—off their loans.
With a $200,000 mortgage at 6% interest, for example, the normal monthly payment would be $1,199.10. By making half that payment ($599.55) every two weeks instead, a homeowner could pay off the home five years early and save ...