Do you have outstanding debt that keeps bogging you down? Do you often times wonder which order is correct – save now and pay the debt later, or pay the debt off now, and then start saving after? Well, you are not alone.
When you have debt (money owed), it can be an obstacle in achieving your financial goals. The reason for this is because the money that is to be used to increase your savings or purchase things of value (assets), has to be used to pay someone else, for money that you had previously borrowed, or to pay for items you took on credit or a financing agreement.
If you have the desire to save but you also have debt, do not focus on one and neglect the other. I would recommend that you focus on both at the same time, and contribute funds to both. If you focus solely on paying off the debt, and neglecting to save some funds, you may find yourself cash strapped if an emergency arises. This may result in you borrowing again just to pay for the emergency, which further adds to your debt. On the other hand, if you only focus on saving, and neglect to pay your debts, you may find that the interest charges on the debt keeps increasing which adds to your debt balance.
As I stated above, I strongly recommend that you save and pay your debts at the same time. That way, you have some funds in savings, just in case you need it, but at the same time, you are being responsible and paying off your obligations. The ultimate goal is to rid yourself of the debt, and to use those funds to add to your savings, once the debt is eliminated.
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