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Why You Must Get Out of Debt Now

Most people know it's important to get out of debt before it can overwhelm their long-term finances. But after years of being able to take it easy with your debt, 2014 could well be your last chance to erase that obligation on relatively easy terms.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at why it's so important to pay off your debt in 2014. Dan notes that with rates likely to be on the rise this year, now's your last chance to lock in low rates on "good" debt like mortgages and fixed-rate student loans. Meanwhile, he points out that JPMorgan Chase  (NYSE: JPM  ) , Bank of America (NYSE: BAC  ) , Citigroup (NYSE: C  ) , and other banks will be looking for ways to make up for lost revenue from mortgage refinancing activity, and rising credit card rates are likely to take a bigger bite out of those in debt. By taking care of credit card debt now rather than later, you can make sure you won't end up getting trapped by rising rates.

The next step after getting out of debt
Once your debt is gone, you can start getting your net worth into the positive column by investing. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.


Read/Post Comments (3) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 16, 2014, at 11:44 AM, SeanCumm007 wrote:

    Get out of variable debt now. Keep your fixed debt.

  • Report this Comment On January 18, 2014, at 10:29 AM, rickray777 wrote:

    Well, it was in the summer of 2008 that I started living just a little beyond my means with my new credit card; but early 2009 was when it REALLY took off! It was obviously stupid of me to fall into that trap in the first place (living beyond one's means); it cost me five years of my life before it was finally paid off (mostly during 2013). There is just so much that you miss out on, when you're in that kind of debt (say, 4K+)! Worst of all, your better judgment in life is seriously compromised. Whatever you do, don't make the same mistake I did. I thus currently view 2014 as a year to remain debt-free, one day at a time.

  • Report this Comment On January 20, 2014, at 6:35 PM, Freemarketof1 wrote:

    It is always a good excercise in financial discipline to focus on paying off existing debt while not establishing any NEW debt. This is especially true when interest rates are rising. Living in the cash world has many advantages not the least of which is that if you don't have easy, cheap money available, like revolving credit, you won't spend it easily or pay high prices on things that are CHEAP (of lesser quality).

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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