Friday, 1 Feb 2008
Q: Should I save first or pay down debt?
A: This is one of the most frequently asked questions. The answer will vary according to your situation. However, I generally suggest establishing some level of savings (even as little as $500) before accelerating debt payments. Next, you should determine what is ‘good debt’ such as mortgage loans and student loans and what is ‘bad debt’ such as credit card debt. Pay off the high-interest bad debt first and then move on to investing and reducing good debt.
Q: I’m having a hard time saving money. Do you have any ideas or suggestions?
A: Set up automatic transfers into your savings account – out of sight, out of mind. Don’t pay unnecessary fees – late fees, ATM fees, etc. Those small fees can add up over the course of a month. Consider taking your lunch to work if you don’t already. $5/day for lunch at work is $100/mo. That’s not chump change. Cut expenses if possible. Do you really need the super deluxe cable package? With a little creativity, you will be able to increase your savings in no time.
July 16th, 2008 at 10:02 PM
Good article, but many people who are displaying these signs today are based on the current dismal housing market. That’s why many people who purchased houses at the peak of the housing boom are crying foul now.
July 18th, 2008 at 1:12 AM
Great post.
I couldn’t agree more when it comes to your home. I think too many of us pay WAY TOO much for the homes we buy.
My wife and I just battled with the idea of buying our first home right now; instead, we decided to rent for $600 per month and save the other $800 that would be put towards our house. Why not? We’ll save for 2 or 3 years and later put a huge down payment on something that we adore.
July 23rd, 2008 at 10:51 AM
Great points to keep in mind. I know that I am not living beyond my means but I could be saving much more that I am saving currently.
Thanks for the 5 signs.
That’s why I try to automate my savings as much as possible. If I can’t see it, I can’t spend it