{"id":143499,"date":"2019-07-17T02:00:42","date_gmt":"2019-07-17T09:00:42","guid":{"rendered":"https:\/\/fabfitfun.com\/magazine\/?p=143499"},"modified":"2020-08-05T22:05:25","modified_gmt":"2020-08-06T05:05:25","slug":"should-you-pay-debt-before-saving","status":"publish","type":"post","link":"https:\/\/fabfitfun.com\/magazine\/should-you-pay-debt-before-saving\/","title":{"rendered":"Debt vs. Savings \u2013 Which Should Come First?"},"content":{"rendered":"

When it comes to choosing between paying off debt or saving for the future, the right choice isn’t always crystal clear, especially when pursued by a company like moorcroft debt recovery<\/a> company. \u201cThe question is a hard one, as it\u2019s not as easy as just choosing debt or savings,\u201d says Sean Fox, co-president of Freedom Debt Relief<\/a>.<\/p>\n

Fox adds that while everyone’s financial situation may be different, there are some general rules to follow. Check them out below:<\/p>\n

Always pay your necessities first<\/strong>
\nIt\u2019s a total no-brainer, but before you even think about choosing between debt or savings, make sure you get your necessities (rent, mortgage, utilities, car payments, etc.) taken care of first. You should also take take of \u201csecured\u201d debts, which are loans that are secured by a tangible asset such as a home or car. \u201cIf these payments are not made on time, you could lose the asset and your place to live,\u201d Fox says.<\/p>\n

Take care of student loan debt<\/strong>
\nStudent loan debt never goes away. Even in bankruptcy, Fox says, it can\u2019t be discharged. So make the required monthly payments on student loans, while putting extra money toward other debt including credit cards.<\/p>\n

Pay down credit card debt<\/strong>
\n\u201cFew, if any, investments will return as much as eliminating credit card debt,\u201d Fox says. \u201cAt today\u2019s rates, paying it off effectively produces a 15 to 20 percent return.\u201d Besides, having no credit card debt can give you a \u201cfinancial cushion\u201d in itself. If you can\u2019t pay down credit card debt while making student loan payments, you can consider other options. For instance, a personal loan can help if you have good credit and cards with high-interest rates. Debt settlement can also be helpful if you have \u201cserious unsecured debt\u201d of $7,500 or more and you\u2019re struggling to make minimum payments. Credit counseling is also an option for those who could benefit from slightly lower interest rates on a credit card.<\/p>\n

Build an emergency fund while paying off credit card debt<\/strong>
\nThis is why the question of debt or savings isn\u2019t so easy to answer. You should definitely make it a goal to take care of debt as soon as possible, but that doesn\u2019t mean you should put off saving completely. The good thing is, building an emergency fund is as easy as saving just $10 a week. It\u2019s perfectly OK to start small. \u201cKeep in mind that even just a few hundred dollars can make the difference between charging and not charging an unexpected expense,\u201d Fox says. \u201cAs salary increases and credit card debt decreases, increase the amount of savings.\u201d You want to work toward building an emergency fund that covers six to nine months of necessary expenses.<\/p>\n

Save for retirement<\/strong>
\nRetirement may seem like a lifetime away, but if you work for a company that offers any kind of retirement savings plan, try to contribute to this while you\u2019re taking care of debts. If your employer matches any part of your contributions, it\u2019s additional savings at no cost to you. \u201cNot taking advantage of this is like giving money away,\u201d Fox says.<\/p>\n

So which should come first: debt or savings? Technically, it\u2019s important to take care of debt as soon as possible. In the long run, it can make your life so much easier. But don\u2019t forget to put some money away in your savings as well. You never know when you\u2019ll need that extra cash.<\/p>\n

xx, The FabFitFun Team<\/p>\n","protected":false},"excerpt":"When it comes to choosing between paying off debt or saving for the future, the ...","author":7532769,"featured_media":143537,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[260],"tags":[],"thumbnail_url":"https:\/\/static.fabfitfun.com\/magazine\/wp-content\/uploads\/2019\/07\/17122639\/shutterstock_434519134.jpg","thumbnail_url_middle_card":"https:\/\/static.fabfitfun.com\/magazine\/wp-content\/uploads\/2019\/07\/17122639\/shutterstock_434519134-386x200.jpg","formated_date":"July 17, 2019","category_name":"Life","category_icon":"https:\/\/d3vodd1ws13xud.cloudfront.net\/magazine\/wp-content\/uploads\/2017\/10\/10113832\/entertainment.svg","author_name":"Kristi Fellizar","trending":false,"sponsored":false,"random_color":"#254e8c","_links":{"self":[{"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/posts\/143499"}],"collection":[{"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/users\/7532769"}],"replies":[{"embeddable":true,"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/comments?post=143499"}],"version-history":[{"count":0,"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/posts\/143499\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/media\/143537"}],"wp:attachment":[{"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/media?parent=143499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/categories?post=143499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fabfitfun.com\/magazine\/wp-json\/wp\/v2\/tags?post=143499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}