Debt is neither good nor bad – it just is. You just have to realize the benefits you have received as a result of having access to the credit. But, having said that, rather than considering whether you should pay off or reduce debt, you can also consider whether rearranging it might be more effective. For example, if you currently have a loan on a car, which is depreciating the asset with perhaps little or no tax savings on the interest you are paying on the loan (check with your accountant about details for your personal situation), you will do so better long term to rearrange your debt to invest in assets that will increase in value, provide regular income, and enable the interest on the loan to be tax deductible. When you look at the whole picture, you are looking at using available cash to increase your income; looking for ways to maximize tax deductions and credits; and looking to use existing income to maximize your whole financial picture. This is also one reason why the question above, whether it’s better to lease or borrow to finance a car, is not a simple stand-alone answer.

How would you decide if this is possible? In order to make decisions, you need to have a complete picture of all your assets and liabilities including the following details, which you can then work with a financial professional to arrange efficiently for your unique set of circumstances and goals: amount of debt, amount of credit available, payment amounts, payment dates, pre-payment penalties (if any), investments, other assets, and current and future cash flow requirements.