Savings or debt? Recently I was reading in a couple forums and I've found a few people asking what would be better, to save money or concentrate on paying off your debt first? While I'm not going to say which one is better my outcome here is not to give you a direct answer to that question but to help you make the decision which would be better for you to do first.
Which would you do first? Depending on your situation this question can have a multitude of answers.
If there is a preferred way you would go about this leave me comment.
If it's hard for you to decide on which would be the option to place the most importance on don't worry your not the only one.
But I do want to make one thing clear first.
Making a decision is better than making none at all.
Even if it may be the wrong decision.
I've seen this many times sometimes we just can't make up are minds about which way to handle things.
And then it happens.
NOTHING! We literally lock up and do nothing.
The worst part about that is we allow ourselves to stop simply because we may not like the outcome we are going to face.
Don't worry about whether it is wrong right.
Sometimes just taking action is all you need to do to get the ball rolling.
In fact you may be saying to yourself that you want to take some time to review your options.
Thinking this will give you a clearer path to follow.
Though what I have found is that taking action clarifies your thought process and helps you make better decisions.
If you don't believe me try it once.
So here is a simple exercise I want you to do to help you consider what may be the best option for you.
Compare and Contrast Take out a sheet of paper and write savings on one side and pay debt on the other.
Now on the savings side write all the great things that would happen if you saved more money than pay off your debt.
List as many as you can.
Then do the same on the other side with the pay off debt option.
For example, on the saving side you might put: Build up an emergency fund Have extra spending cash Save for retirement Save money for kids college funds Then for the paying off debt side you might put: Pay off credit cards Frees up $80 a month from credit cards Pay down mortgage balance Creates more equity in my home You get the idea.
Once you are finished simply see which side has the most points that you would agree with.
Not just the ones with the most points but the ones you feel hold the most weight in your opinion.
Which would you weigh heavily in? Leave me a comment how you feel about this.
Everyone's situation is always different.
Nobody has the same exact situation.
So in order for you to decide there are some key factors you may also want to think about.
How much debt do you have? How long would it take you to pay off your debts? What debts do you have to pay off? How old are you? How much do you have saved up? How long would it take you save that money up? What are you saving for? Is debt the right answer? In reviewing the questions above if you have a lot of debt and it will take a long time to pay it off you may want to start here.
However it also depends on what type of debts you have and your age.
The reason you need to consider is at what age do you stop paying debt and save for retirement.
If you pay off all your debt your entire life but never save any money to retire on you may end up facing some tough decisions.
If you want to put your own debt plan together read this first.
Age has a big weight in this issue.
The sooner you start saving money the better and the easier it will be to fund your retirement, save for college funding, and save for an emergency fund of all things.
If you are older and close to retirement and haven't saved any money yet it may be to late.
There may be some other options here but saving money is not one of them.
I'll talk about this in future articles.
To learn more about why saving now is better read this article.
Is saving the right answer? Again it all depends on how much money you have, what you are saving for, and of course how long it will take.
If you are 60 and just starting to save for retirement you aren't going to get to far.
On the other hand if you were 25 you may want to start saving now.
At least in your 401k program to start.
When it comes to saving it's never to early to start.
Compromise In most cases though you just won't do one or the other unless it's the only way to handle the situation.
Most of the time you will be doing both but placing emphasis on one more than the other.
For example, you may be deep in debt but at the same time you may be saving money in your 401k program at your job if they offer one.
This could be a possibility.
That's what this is all about the options you have available.
Finally, think about the different opportunities available.
Make sure you take the time to come up with a few ideas to handle the situation don't just do the one that sounds best to you.
Then do the most important step.
Take Action! So? How do you handle this situation? Would you pay off you debt first or would you save the money or would you compromise on the situation? Leave a comment and let me know.
Which would you do first? Depending on your situation this question can have a multitude of answers.
If there is a preferred way you would go about this leave me comment.
If it's hard for you to decide on which would be the option to place the most importance on don't worry your not the only one.
But I do want to make one thing clear first.
Making a decision is better than making none at all.
Even if it may be the wrong decision.
I've seen this many times sometimes we just can't make up are minds about which way to handle things.
And then it happens.
NOTHING! We literally lock up and do nothing.
The worst part about that is we allow ourselves to stop simply because we may not like the outcome we are going to face.
Don't worry about whether it is wrong right.
Sometimes just taking action is all you need to do to get the ball rolling.
In fact you may be saying to yourself that you want to take some time to review your options.
Thinking this will give you a clearer path to follow.
Though what I have found is that taking action clarifies your thought process and helps you make better decisions.
If you don't believe me try it once.
So here is a simple exercise I want you to do to help you consider what may be the best option for you.
Compare and Contrast Take out a sheet of paper and write savings on one side and pay debt on the other.
Now on the savings side write all the great things that would happen if you saved more money than pay off your debt.
List as many as you can.
Then do the same on the other side with the pay off debt option.
For example, on the saving side you might put: Build up an emergency fund Have extra spending cash Save for retirement Save money for kids college funds Then for the paying off debt side you might put: Pay off credit cards Frees up $80 a month from credit cards Pay down mortgage balance Creates more equity in my home You get the idea.
Once you are finished simply see which side has the most points that you would agree with.
Not just the ones with the most points but the ones you feel hold the most weight in your opinion.
Which would you weigh heavily in? Leave me a comment how you feel about this.
Everyone's situation is always different.
Nobody has the same exact situation.
So in order for you to decide there are some key factors you may also want to think about.
How much debt do you have? How long would it take you to pay off your debts? What debts do you have to pay off? How old are you? How much do you have saved up? How long would it take you save that money up? What are you saving for? Is debt the right answer? In reviewing the questions above if you have a lot of debt and it will take a long time to pay it off you may want to start here.
However it also depends on what type of debts you have and your age.
The reason you need to consider is at what age do you stop paying debt and save for retirement.
If you pay off all your debt your entire life but never save any money to retire on you may end up facing some tough decisions.
If you want to put your own debt plan together read this first.
Age has a big weight in this issue.
The sooner you start saving money the better and the easier it will be to fund your retirement, save for college funding, and save for an emergency fund of all things.
If you are older and close to retirement and haven't saved any money yet it may be to late.
There may be some other options here but saving money is not one of them.
I'll talk about this in future articles.
To learn more about why saving now is better read this article.
Is saving the right answer? Again it all depends on how much money you have, what you are saving for, and of course how long it will take.
If you are 60 and just starting to save for retirement you aren't going to get to far.
On the other hand if you were 25 you may want to start saving now.
At least in your 401k program to start.
When it comes to saving it's never to early to start.
Compromise In most cases though you just won't do one or the other unless it's the only way to handle the situation.
Most of the time you will be doing both but placing emphasis on one more than the other.
For example, you may be deep in debt but at the same time you may be saving money in your 401k program at your job if they offer one.
This could be a possibility.
That's what this is all about the options you have available.
Finally, think about the different opportunities available.
Make sure you take the time to come up with a few ideas to handle the situation don't just do the one that sounds best to you.
Then do the most important step.
Take Action! So? How do you handle this situation? Would you pay off you debt first or would you save the money or would you compromise on the situation? Leave a comment and let me know.
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