Should I save up money or pay off my debt?
I can only weigh in here based on what I would do. And that would be to bring my savings up to $1,000 as fast as possible and keep that safe as a little emergency fund. Then I'd throw everything I had at my credit card debts and try and get debt-free as soon as I could. With an exciting goal like starting a business, and future goals like buying a home, it seems like your "why" is clear and your motivation is high. You'll likely be able to hustle hard and make these goals happen sooner than you think. It's just better, I believe to get these things started on solid ground. I am a believer (a recent convert actually) in the Debt Snowball method. This is where you lay out all of your debts, smallest to largest, regardless of interest rate. Then you pay the minimums on everything but the smallest debt. The smallest debt gets tackled first. You'll need to establish a budget and determine what expenses you can eliminate and where you can pull money from to put toward debt. And maintaining that budget is key. Bringing in extra money can seriously expedite this whole process. I recommend looking into ways to do that - part time jobs, maybe a side business or consulting gig related to the business you want to start? When you've paid that first debt off, you apply that payment to the next smallest and work to destroy it. And so forth and sk on. You systematically knock them out one by one this way. Once you get going, the psychological effect of winning (even with the small loans) will cause you to build momentum and tackle the remaining debt with more intensity. If you attack this debt with all you've got, you'll probably be out faster than you think. And that's when you can truly start focusing on building wealth. It's really amazing how much easier (and faster) it is to save when you don't have payments!I'd recommend checking out Dave Ramsey's Total Money Makeover. I don't follow his plan strictly, but his principles have really helped me.
Pay off debt or save money?
A balanced strategy that includes both debt reduction and savings is usually best, which appears to be what you're doing. However, if you already have enough savings for minor emergencies and you have a lot of high-interest debt, it may be better to adjust your strategy for a couple of years to reduce the debt. As for helping your credit, the savings don't affect your credit score but reducing your loan balance does.
Pay off debt or save?
ok so my boyfriend and i have a disagreement. i have a student loan of 26,000 and he has a car loan of 13,000. he wants to pay off all our debts and then save for our house. or whatever. i say. we are always going to have debt the rest of our lives. ( car payments, when we buy our house. etc) i say we need to save. for our wedding which is going to be in a couple of years. which will be here in no time. i think we'll be engaged in about a year he says. then he says oh i don't want to get engaged until all our debts are paid. but we are always going to be in debt. oh i pay 200 amonth on my loan. i don't have to pay it for another 4 years but i'm starting now to avoid hight interest rates. so whose right? do we save or pay off our debts? thanks so much.
Save Money or Pay Debt First?
Pay off your debt first. Sit down and make a budget. Rent, car payment, insurance, weekly gas expenditures, groceries, utilities, etc. to see how much you will be able to pay on your debt each month. Pay off your lowest debt first, then when your pay that off, apply that payment to your next lowest debt. It's called the Snowball Effect (Dave Ramsey, Financial Peace). Example: You owe JCPenney $500, Sears $800, and Visa $1000. If you pay $50 a month to JCP and $30 to Sears, then when you pay JCP off, put that 50 bucks to your Sears balance making it a monthly payment of 80. It works, trust me. Then your next step is to save. The first thing to save for is an emergency fund, which should be $1000. Read Dave Ramsey's book (check it out at your local public library) and check out his website. Seriously, his stuff works. As for paying your debt, you have to be diligent about it. If you can or need to, get a part-time evening or weekend job and put 100% of your earnings toward that debt.
Is it better to pay off your debt or save?
Is it better to pay off your debt or save?I’m going to assume you are starting off with nothing in the bank and some debt. I’m also assuming that you’ve done your homework; you’ve made a budget & are sticking to it, and you have money allocated either to reducing your debt faster than your payment plan, or you can save it.Save up some money in a bank account. This is the start of your emergency fund; it’s money you have on hand to pay unexpected expenses so that you don’t have to go into debt. Get $1000 in there, or whatever it takes to waive fees for the account. It’s bare bones but it pulls you back from the edge a little.Pay off your credit card debt. This is your most expensive and least “helpful” kind of debt and needs to go away. As you pay off the cards, devote that card’s payment into paying off the next one faster.Complete your emergency fund. Once you have paid off the credit card debt, go back to saving. Save until you have 3 to 6 months of expenses in your savings. That gives you money to cover bigger emergencies such as unemployment!Pay off either your car loan or your student loans, depending on which has a higher interest rate. Neither type of debt is tax-deductible.Save for retirement. Now that you have paid off a lot of debt, make sure you’re putting money away in a 401k or IRA. If you don’t have a lot of debt yet, then you may also be able to do the next item at the same time. I recommend doing this even if you have some debt because you want time to work in your favor. Putting away $1000 when you are 25 gets you a lot more in savings than putting away $3000 when you are 40. Start saving as early as you can, even if it isn’t much.Pay off any loan that isn’t a mortgage on your primary residence. You can deduct your mortgage income on your taxes (tax reform pending) so your home mortgage is the last debt you should replay. Assuming you own a home.Save for upcoming large purchases. Planning a trip? Need a new car in a few years? Want to send the kids to college someday, or buy a home? Saving the money first means that you don’t need a loan in order to do these things. There are special types of accounts to save college money.Pay off the mortgage. Then you’ll be completely debt-free, and it gets much easier to save for other goals.I’m sure others will put these things into a different order. Think through how you want to live your life and choose wisely.