Doug needs to get rid of his old, bad debt before he can change his adjustable rate mortgage.
QUESTION: Doug has an adjustable rate mortgage. He has some old, bad debt that he didn’t know was there. Is it better to pay down his current debt or clean up the old stuff if they want to refinance in a year?
ANSWER: Get rid of the old stuff as fast as possible. Stay current on the regular stuff and work the old debt down as fast as you can. Old, bad debt is deadbeat status. Also, when you’re settling old, bad debts ... make sure you get it in writing that it’s settled. Never give anyone electronic access to your checking account, and never give them post-dated checks, because they will clean you out.