Pay off credit cards and car loans first
Recent figures from the Reserve Bank of Australia show home loan borrowers are now about 14 per cent ahead on their loans, equivalent to about 20 months of mortgage repayments because not all borrowers reduced their mortgage repayments when rates began to decline in 2011.
Now is an opportune time to really consider sacrificing a bit extra to save a substantial amount in the long-term. Before committing to extra repayments, borrowers should consider paying off credit card debt and car loans first.
It's also widely accepted that borrowers should put cash equal to about 3 – 6 months’ worth of expenses in a savings account for emergencies such as loss of income.
Source: Herald Sun