Never carry debt except for a mortgage. And I go against what the experts think—don’t carry a mortgage either. Pay it off as fast as you can.

Your top 3 financial goals should be:
1. Save an emergency fund of 2-6 months of your regular monthly income–then don’t touch it.
2. Get rid of all debt and don’t get any more debt.
3. Save, save, save. Save a minimum of 10% a month. Top out your 401K. Top out your IRA. Make a vehicle savings and a vacation fund. Never exceed your funds.

Here is the Dave Ramsey method of getting rid of debt. Create a snowball of reducing debt.

1. Organize your debt into the smallest amount to the largest.
2. Pay off the smallest first as fast as possible; pay minimums on the rest.
3. Pay the next smallest using the amount of the first debt payment on top of that.
4. Then pay off your mortgage, which should be your largest debt.

This goes against what many experts say. Most will say to get rid of the debt with the highest interest rate. But that is a very slow way to get rid of debt. Using the snowball allows you to see very fast progress in debt elimination. Believe me, when you get down to that last 1 or 2 debts, you’ll be amazed. The stress will just fall off your shoulders.

Once you are out of debt, you are no longer losing money on interest. You are only gaining interest in savings and investments. And by building a big savings, it will give you more opportunities for growth should something come up. A good credit rating is not something you need to be proud of. Instead, pay as much as you can with cash. That makes a credit rating worthless. Being debt free is the only way to live.