Despite the economic recovery, there continues to be a strain on the budgets of the average American.  Even though homes have increased in value, many have not recovered from the deep recession and remain over-burdened with debt.

There is a way out of this dilemma for the average American. The solution will require prudent fiscal management and planning, things that many of us are not used to implementing. The first step towards fiscal sanity and achieving the American dream of a comfortable retirement is to lower or eliminate all debt payments.

Lowering or eliminating your debt payments can also be a daunting task when you are drowning in debt. Your loans dictate that you will be paying for 30 years or more and that may as well be forever. You may be straining to make your minimum payments; but, if you adhere to certain financial principals, you can turn what seems an insurmountable task into one that will pave your way to success. What are these principals?

First, you must start now. A dollar of debt paid down today is worth many dollars of debt paid down ten years from now. It is the same concept as saving money. Thirty years from now, a dollar saved today will be worth many times more than a dollar saved 10 years from now. This concept does not mean that you have to put thousands of dollars toward your debts in the first month. Even small payments today will save you thousands later on.

Second, understand that all debt is not equal. What are the differences in debt? For one, mortgage debt is tax deductible and consumer debt is not. This does not mean that you should obtain as much mortgage debt as possible because it is free. If you borrow $1.00 and the government gives you back $0.25, you still owe $0.75. What it does mean is that if you have a significant amount of consumer debt and a significant amount of mortgage debt, it makes sense to concentrate on consumer debt elimination first.

You also want to concentrate on consumer debt elimination because consumer debt is typically easier to attack than mortgage debt and gains are easier to achieve. This is because consumer debt is paid out over a shorter period than mortgage debt.

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