Pay Off Debt
Many financial experts believe it is best to pay off debt rather than increase savings because most debts are at a higher interest rate than interest earned in savings. Paying off debts will save money that is currently wasted paying interest and make it available for greater savings in the future.
Increase Savings
Some money experts contend it is necessary to have some savings before paying down debt. These experts believe an emergency fund of $500 to $1,000 is necessary in times of tight credit. After saving the emergency fund, finances can be allocated to debt payment.
Bottom Line
Paying debt or saving is not a totally straightforward decision. Some experts believe debt should be attacked first, while others believe saving an emergency fund is best. If credit is available for emergencies, paying down debt first is most likely the best option. If no credit is available, start with the emergency fund and then pay down debt.
0 comments:
Post a Comment