Is it better to save money or pay off debt?
Paying down debt and saving money is one of the many difficult financial choices that the regular human makes. But how can you achieve that balance in your own circumstance? The answer depends, in part, on how much high-interest debt you’re carrying and whether you already have enough money set up for emergency savings.
In some circumstances, you might choose to combine saving with debt repayment.
Simple math indicates that paying off debt rather than putting money in a savings account is a better use of your money because certain credit card companies charge interest rates of up to 30% on outstanding balances, while the majority of savings accounts only yield approximately 1% interest.
The sooner you make the decision to pay off your debts quickly, the sooner you may benefit from the financial and mental freedom that comes with being debt-free.
It can feel like you’re running out of money for the usual costs you need to pay each month when you’re paying large interest payments each month or if you’re simply making minimum payments. You’ll also get the impression that you’ll be in debt forever—well, maybe not forever, but certainly for a very long time.
A credit consultant can offer free, private assistance whether your primary goals are debt repayment, savings, or a combination of the two.