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The Great Savings VS. Debt Payoff Question

By Marilyn Katz

Republish: EasyPublish™
Published: 19Jul2011
Word count: 626
Viewed: 229 time(s)

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In a perfect world, we would all be able to follow the advice of high paid financial gurus on TV. Not only would we pay off our debt, we would have big heaps of money in our savings and retirement funds! However, most of us have to stick to some sort of budget for the time being. So we have to make some hard decisions.

In the long run, is it better to pay off debt or save more money? Of course, both of those are great goals to have. But how do you decide which one you should concentrate on first if you have limited funds?

If you can save more money, you can probably reduce your need for debt in the future. An ermergency fund means that you will be able to handle minor emergencies so you will not need to rely on your credit cards or retail loans. A solid retirement fund means that you can plan for a comfortable future.

However, here is the problem. If you have to service a lot of high interest rate debt, you will have a lot less money to save. When you are spending hundreds of dollars to make payments, how can you allocate some money towards savings? After all, you still have to pay your mortgage and buy groceries while you are working on your future plans!

In addition, people with lower debt balances usually can get better credit terms. If you need to borrow money for a mortgage or auto loan, or even an unplanned trip to the dentist, you can probably get that money at a very low interest rates.

There are really only about three solutions to this problem. All of them require some patience and flexibility. You have to decide how important paying off debt and savings are to you and your family. Then you can begin to come up with a plan. The plan may not work in a few weeks or a few months, but over time you should start to be better off.

First, you should try to figure out how you can balance your savings goals with your debt payoff plan. I would suggest that you always try to make more than the minimum payment, even if it is only a few dollars more. I would also suggest that you put something aside for a rainy day, even if that is only a few dollars. Given some time, and any luck at all, and you will be better off in the future.

You may be able to find a credit card balance transfer offer too. If you can replace a high interest rate with a lower one, your payments should be lower too!

Sometimes you just need to come up with more money. There are two ways to do this.

You can examine your monthly expenses for any places you can cut costs without too much pain. You may be able to, for example, get a better deal on your phone service or cut out your weekly trip to the movies. Even if you can save $100 a month, that can add up.

Secondly, you may consider some type of moonlighting job to earn extra income. Lots of people offer to do home repairs, watch kids, or even walk dogs in order to add a little more money to their family budget!

Paying off debt and saving money are both worthy goals. Nobody said they would be easy. But if you can try to do both, you will be much better off in the long run.

Let us help you find a good 0% balance transfer offer so you can save money while you work on reducing your balance! You can use your good credit score to save money and pay less money to credit card companies.

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