“Rates are low—let’s not waste this opportunity.”

This little phrase has come to have two meanings, depending on how you see the world.

It has the meaning that you (the average American family) give it almost immediately as you read it: I can reduce my debt costs and lower my payment and eliminate my debt faster. I talk with 100s of families per month about this and when I ask them how they want to use lower rates, they ALWAYS say that they want to save money every month and pay off their home sooner if possible. Always.

But then there’s the meaning that our out-to-lunch treasury secretary gives it. When pressed last week as to why the financial plan for the US Government includes borrowing so much more money, Tim Geitner responded differently than you or I might have. He said:

“The world has confidence in America right now to the tune of 2%. It is willing to lend us money right now at 2% interest. We should borrow more and spend it on our economy.”

Hmmm.

Now, if I met with a client and suggested that they borrow more money only to spend it on something that has had no proof it would gain a return, I would lose both my mortgage license as well as my RIA designation (designations that the government graciously bestows and then boldly contradicts).

Folks, rates are very low right now. On everything. Use this undeserved gift to eliminate your debt once and for all. All of it. You will be glad you did in the end.

Let’s say you have a credit card with a balance of $5000. The interest rate is okay right now. It’s under 10%, say 8.99. The minimum payment of $150 per month is calculated by multiplying the outstanding balance by 3%. Now, you’ve had this balance around for a while, but you’ve gotten used to it. Things are tight and it’s hard to think about adding anything to that monthly bill, which at these rates and payments is only hitting the balance by $100. That means if you pay minimum payments, it will take you five years or more to pay this off. But then the credit card company’s plan is that you never will pay it off. They love your interest payment of $50 per month and would rather you keep making it. And they know that unless you DECIDE not to, you will likely keep paying them interest at some level.

DECIDE NOT TO. Make a decision today to get them out of your financial plan once and for all. As Dave Ramsey says, “GROW UP and act your Wage.” You cannot afford to keep borrowing money like a drunken politician.

You need to see this low-rate environment for what it is—an opportunity to make something good happen. Don’t let it lull you to sleep only to be wakened by a letter stating that the rate will now be 15% and they now want a minimum payment of $250. The increase is almost all interest, and there is a very good chance that their small print allows them to do it to you. Don’t believe the banks and credit unions who say that they are your friend when they are willing and able to treat you like that.

And oh yeah, next November, remind our next president and senators that China is not likely to be any kinder to the United States than banks and credit unions have been to the average consumer.

We need to pay it off. Not down, OFF.