Debtor Base

Credit Card DebtOne pundit on CNN last February during Black History Month was asked about comments made by a professional athlete about owners and slavery and he cited that "true slavery is debt." An interesting point to be sure but there are all kinds of debt out there ranging from consumer debt like credit cards, payday loans, personal loans, unsecured loans, student loans and more. There is also real estate debt which comes in the form of mortgages, "reverse mortgages" and even the dreaded home equity loan.

Money managers suggest that not all debt is bad. Borrowing money to buy an asset that appreciates in value can be a good investment. On the other hand, borrowing money to live on a day to day basis for any extended period of time is a good way to increase the price of the things you buy by a solid 20 percent per year compounded. That's one heck of a bad value.

Home In San FranciscoReal estate of the most critical category where consumers struggle with loans. Leading Beverly Hills real estate agent, Jade Mills states that on a $1,100,000 mortgage in the current market at 4 percent interest, which is an all time low a consumer will pay $790,564 in total interest over 30 years plus of course the principal of $1,100,000 in addition for a sum total of $1,890,564 in total debt.

Top producing Malibu real estate agent, Chris Cortazzo adds to the argument that if the property increases in value that the nearly $800,000 isn't nearly as much of an issue long term. Additionally, the current tax code in the United States allows for a family or individual to write off the mortgage interest on up to $1,100,000 thus creating a real-world tax shelter for people who can afford such a large loan (or smaller) that reduces the effective debt by upwards of $50,000 per month in debt per year.

Tips To Pay Off Real Estate Debt

Hopefully, these tips can help you get to a debt free lifestyle. As one prominent Los Angeles attorney says "you don't know freedom until you wake up in the morning and realize that you don't go to work to pay the bank." Long term, being debt-free is a really healthy goal for everybody.