What should I pay off first: my mortgage or my credit card debt?

I owe about $22,000 on my house and $18,000 on credit cards. I am paying more than minimum payments on both. Now I am on disability and my income was cut by 60%. I think that I should pay off my house first so I have a place to live if my income changes again. At that point, I would pay the minimum on my credit cards. I have a credit score around 750. My plan is to move the balances around to keep the interest rates low. When the house is paid off in full, I would also have my credit cards paid off. What do you advise?

 

Debt, Real Estate
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3 weeks ago
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Focus on paying off the credit cards first. This type of consumer debt is considered "bad debt". A mortgage would be considered "good debt". The two main differences would be that you can deduct mortgage interest from tax liabilities and they are typically a fraction of the rate on credit cards. With that said, you should consider converting your credit card debt to a HELOC (home equity line of credit) and then chopping up all of your cards except one.

Best of Luck!

Mike

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