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Good News & Ranking Debt

September 22nd, 2010 at 10:30 am

The company in Alaska who processed and shipped DH's fish charged us for his AND his boss' fish. The good news is we are getting $125 back. Yay!


I was thinking yesterday about debt. I think we can all agree that there is bad debt and worse debt, but how would you "rank" it?

Here is what I came up with in order from not-so-bad to worst.

Mortgage Debt
Student Loan (IF you're using what you learned to make money)
Auto Loan
Student Loans (when you're NOT using what you learned)
Personal Loans from family/friends
Credit Cards
RV/Boat/Recreational Loans
"Rent to Own" places for furniture/appliances
Personal Loans/Check Cashing places

So what do you think? How would you rank these?

***Edit: Disclaimer Wink
This list is just for fun. My musings about debt. I'm assuming these debts under "normal" conditions. Of course there is exceptions to every debt. Underwater mortgages, using HELOC as an ATM, "buying" a new car every three years, a personal loan that destroys a friendship or a medical loan for butt cheek implants vs. heart surgery. Big Grin

9 Responses to “Good News & Ranking Debt”

  1. monkeymama Says:

    I think it depends. We all certainly know people with BAD BAD BAD mortgage debt. Heck, most the people I know. (10 times their income, can't refi to a reasonable rate, kind of bad).

    Student loans can be pretty nasty. Even if the rates are low, they are not dischargeable in any sort of hardship. So I would put them high on the list to be paid off.

    Auto loans can really be good or bad. I have hardly purchased a car without borrowing a small sum for a car. I don't think perpetual/lifetime of car loans makes sense for anyone, on the other hand.

    I think HELOCs are bad bad bad, personally. (I seem to be alone on this one - I have never liked the idea of HELOC as emergency fund - common advice from most financial gurus).

    PErsonal loans come with non-monetary consequences.

    Mortgage is the only debt I have actually ever been a fan of, but I think it's more due to regional economics than anything else. I could pay more to rent a smaller house. Big Grin I like my mortgage - thanks!

  2. Looking Forward Says:

    Of course there is always going to be exceptions. Underwater in the mortgage, or high interest rate on car. I should have said I made this list on the condition that the debt is ranked under "normal" circumstances. Like a "normal" fixed rate mortgage and a HELOC used for home improvements or repairs, not as an ATM. Auto loan for a car that will be kept for 8-10 years.

    I know we would pay more than our mortgage P & I (& probably PITI) to rent a house around here.

  3. monkeymama Says:

    I find it hard to look at the list objectively, because in this day and age, I know few people with reaonsable/makes sense type of loans, when it comes to ANY of the ones listed above. So, I see what you are saying, but real life really blurs the lines pretty good!

  4. Looking Forward Says:

    You are totally right; real life can get messy. That's why it took me awhile to reason my list out. My purpose is just food for thought. Just what I was mulling over in my mind while I was driving/not doing anything else.

  5. Ima saver Says:

    Well, the only kind of debt or loan we ever have, is a car loan. Why? Well, my dh is a car person. He would own 50 cars if I would let him. The rule is, we can only have one car loan at a time. So by keeping a car loan, I stop him from buying another car!!

  6. crazyliblady Says:

    This is assuming of course that the person in question is not behind on any of these items, particularly your mortgage. You might rank these differently, depending on interest rates, amount of the loan(s), and whether they are behind/in collections or not.

    I think I would rank check cashing places the highest because of their highway robbery rates. HELOCs I would put above the mortgage. Regardless of whether you are using your degree or not does not matter. Student loans definitely should be paid off, but they are not as high priority as necessities, such as a mortgage payment.

    Personal Loans/Check Cashing places
    Credit Cards
    Medical Debt
    Mortgage Debt
    "Rent to Own" places for furniture/appliances
    Student Loan (IF you're using what you learned to make money)
    Student Loans (when you're NOT using what you learned)
    RV/Boat/Recreational Loans
    Auto Loan
    Personal Loans from family/friends

  7. crazyliblady Says:

    Come to think about it more, medical debt might need to go further down the list like under auto loans.

  8. Looking Forward Says:

    He,He Good discussion. Smile
    Ima-Great plan to keep your hubby in "check"!

    CLL-My list is from better to worse. Not really a list of what should be paid off first, second, third and so on. My list is more like what I think is an okay debt listed down to what I think is really bad. I't looks like you've got the same idea, but your list is upsidedown from mine (worst to better?) Good input.

    Thrift-Exactly! Big Grin Maybe I should have put it like that.

  9. -Jerry- Says:

    Medical debt is going to fluctuate on that list in direct proportion to exactly how sick you are. If you have insurance? Not a huge deal, assuming you get better and can deal with the headaches of billing, etc. If you are uninsured, it becomes 100% necessary debt that could very well cost you everything you own. It leads me to wonder what the heck we are doing, because the health status quo in the States is not sustainable.

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