Pay Down Debt vs Increase Savings
Struggling with debt and not being able to put money away into savings can leave many individuals vulnerable to financial problems. Without any set savings plan or debt help program, it becomes increasingly difficult to keep your head above water. Your debt can begin to pile up quickly, and your savings will begin to dwindle or be nonexistent. Using the successful programs offered by Advantage CCS can be your key to eliminating your debt. Sometimes it is difficult to know how much money you should be saving, and how much you should be putting towards lowering your debt. The certified financial counselors at Advantage CCS can advise you in the best course of action.
Determine the Consequences
The choice between paying off your debt or increasing your savings can possibly have consequences, especially in the case of unforeseen events. It is important to identify the correct balance between the two because you do not want to become vulnerable to increased debt when emergencies happen. Creating an emergency savings account (generally enough to pay 3-4 months of regular expenses) can be a great first step towards feeling financially secure. This can be achieved in small gradual increments so that you do not have to take away from the payment to your creditors.
Focus on Interest Rates
In order for your money to begin to work for you and gain interest in savings accounts, you should first focus on eliminating your debt. A good debt help program will assist in kicking you out from under your debt, and once you are stable, the savings portion of each paycheck can increase. With the savings rates at an all-time low, financial advisors often recommend that people consider paying off debt first. Getting out of debt is a major priority if you have a higher interest rate on your debt payments.
Establish Financial Goals
Consider your current financial situation. If this is not where you want to be, there is no shame in searching for assistance through a debt help program and free financial counseling. If you have a large amount of debt, it makes sense to start paying off debt over saving money. This is the best way to clear yourself of financial burdens within a set time-frame, but eventually this will open you up to the possibility of increasing your savings.
Do you currently have a savings account? Are you saving for retirement with and 401k or IRA plan? It may be wise to prepare for your future by investing in a long-term retirement plan. Short-term savings accounts are great for vacations, emergency cash funds, and other needs. But many individuals need to get a clear picture of their financial goals in order to determine if saving money is the best thing to do instead of paying off debt.
Planning for Tomorrow
With the uncertainty of today’s economic climate, it is more important than ever to prepare for the future. Unpredictable events will happen, and hopefully none will be as serious as losing your job or having medical issues, but these are possibilities. Opening a savings account is a smart decision as it provides you with money to fall back upon in case you lose your job or have a serious financial emergency. If you are tired of dealing with debt, consider using a debt help program to help you regain control of your finances and get you out of debt.
If you have any questions about paying down your debt or starting a savings fund, give Advantage CCS a call today or visit us online at www.advantageccs.org to find out how we can help you. If you have a success story about paying down debt or saving money, we’d love to hear from you. Please leave us a comment below. Thank you!