You're listening to The Word on Wealth Tidbit, where John takes a fun approach to the serious matter of your money.
Today the topic is not fun but certainly is serious: debt - we'll explain the two types of debt, secured and unsecured.
Secured debt is when there is an asset used as collateral for a loan. Examples of this are mortgages or auto loans. If there is a failure to repay this debt, the creditor can seize the asset. Unsecured debt is where there are no assets used as collateral, such as credit card debt. These types of debt tend to have higher interest rates because there is more risk.
Ask yourself, are you making enough money to pay off your debts?
Step one is tallying up all of your debt - understand how much debt you have even if it's scary. Step two is figuring out what is the "good" and "bad" debt you have and going through the process of deciding which one to pay first.
Once you have eliminated debt, you can put those same payments into savings or retirement accounts.
Don't run out of money, before you run out of time.