- Off The Grid News - https://www.offthegridnews.com -

Should You Save Or Pay off Your Debts First?


Putting off starting a savings program until you pay off your debts is one of the worst financial moves that you can make. Waiting until your debts are paid off to start saving is a good way to ensure that you’ll never start saving and will always be in debt.

The truth is that most of us will always have some debts, whether it’s credit cards, a mortgage, car loans, or student loans. If you make debt an excuse not to save, then you’ll always have an excuse not to save. You’ll never get into the habit of saving.

Not having a savings can put you deeper into debt because, without one, your only recourse for emergency finance will be credit cards or some other sort of loan. People without a savings often end up running high credit card balances because they have no other way of covering emergency expenses.

You will always have emergency and other unforeseen expenses. A savings can give a family the cash it needs to cover those expenses without having to pile up additional debt.

Building up a savings is the first and most important step on the road to financial freedom. The second step is to pay off your debts. Fortunately, it is fairly easy to save and pay off your debts at the same time. Implement both your savings and your debt-elimination program now.

Saving and Paying off Your Debts

There are several methods of combining savings and debt elimination. The best of these is the cash snowball, or cash reserve plan.

The cash snowball works like this: sit down and figure out the amount of money you will need in your savings to cover foreseeable emergencies. Then concentrate on building up to that amount. Pay the minimum balance on credit cards, pinch pennies, and live frugally, and then put as much into the savings as you can from each paycheck.

New book reveals how to keep this “gangster” economy from murdering your money… [1]

Then, once the savings has reached the level you want, you can start paying off your debts. Stop making savings payments at that point and use that extra money to pay off your debts.

Here are some savings tips that can help you achieve this goal:

How to Implement a Debt Repayment Plan

Once you’ve created the savings, you can implement a debt repayment plan. The best piece of advice for debt repayment is to be flexible. Be willing to change the plan, and don’t get discouraged if you can’t meet your goals immediately. The best way to succeed in paying off your debts is to have a debt repayment strategy. Here are a few good debt repayment strategies:

Staying Out of Debt

Once you pay off your debts, don’t spend that extra cash. Instead, start putting it in your savings. If you eliminate that $200-a-month credit card bill, put the extra $200 in your savings. That will give you more savings, and it will help you live within your means because you will not have that money where you can spend it.

©2013 Off the Grid News

Any extra money you get through debt elimination must go into your savings or investments. The best way to avoid debt in the future is to save up large amounts of cash now.