I work out on Tuesdays with the Kims – my friend Kim the trainer, and my friend Kim from our kids’ school. Actually both Kims have kids in school with mine, which makes it even more confusing.But confusion is the topic here.
The latter Kim caught my spot on the Today Show last Friday and told me she thought my answer to one of the questions was wrong.While sweating profusely (and being ordered by the other Kim to continue lifting the weights as we spoke) Kim and I discussed how a word on a full screen can create confusion.The question was: “You’re in debt and have to pay tons of bills…which one is the most important to pay off?” The choices were credit card bills, mortgage, loans and medical bills.When I spoke with the producer of the show, we talked about which monthly bill someone should pay first. Clearly you want to pay your mortgage first, or you risk losing your home. After that, pay the minimums on your credit cards, putting any extra toward the credit card bill with the highest interest rate.
But the words “pay off” could definitely lead to confusion. Clearly, you don’t want to “pay off” – or put extra cash — toward your mortgage at the moment. In a shaky economy, it’s better to build up cash reserves. You can always decide later to use that cash to pay down your mortgage early. But if you lose your job, it’s going to be tough to tap your home equity. Bottom line: If you are swamped by bills you can’t pay, contact the National Foundation for Credit Counseling. Here’s the Today Show Video:
If you’re looking for more financial tips, I’ll be answering reader emails on CNN’s Issue #1 between 12pm and 1pm today.Meanwhile, with any luck, my weekly meeting with the Kims will “pay off” in better health both now and in the future.
