Paying off debt Vs Saving money

I would say debt comes first before any major savings. It's better to get debt out of the way so you can save more, and also so you can heal your credit. A lot of things take credit now, buying a house, a car, even getting an apartment takes credit.. so having the best credit you can means getting a great place, or a great car and saving money in the future as well as living more secure.

Well a person definately has pressure when he is submerged in loans and debts. Most of the common debts people have are home loans, mortgage loans, education loans, vehicle loans etc. According to your example If I would have been making 400 dollars a week I would save utilise 200 $ towards paying of my debts, save 100 dollars and invest onother 100 $ where I would be sure to get a good reasonable rate of return. That would make sure that I earn money off my savings as well.

It's regarded as sensible to have an emergency nest egg of cash put by for emergencies you may encounter..debt has some uses,for example,a home loan or mortgage would be one of the lowest loan rates it's possible to get..other than that,it's better for your own peace of mind not to be burdened by debt.There was a cartoon I saw online recently that summarised the situation..a number of people on a street with their financial situation in a "Bubble" above their heads..a Student with an outstanding Loan,Someone with a car loan,someone else with a Mortgage..and there on the footpath,begging,sat a homeless guy,the only one there with a net positive financial account of some $5 and change! As long as debt costs more in interest than you'd gain from investing in savings,then you're better off paying off the debt first.

they are different types for debts. but in most of the cases I preferred to pay them first that saving. In the fist type I will pay because I can save myself from paying more interests, but in case the debt is with a friend I would like to pay him too because he is my friend and he lent me that money and now he cant use it for his things or his savings, so it wouldn't be fair if I keep that debt.

this is what i am doing now,i keep on paying my debt while saving some money too.and for me if i make $400 a week in average..i would save $100,another $100 is for other expenses for the week or for the month and $200 for my debt.

I would agree to what they are saying that you should pay debt first and save. Or maybe you can also apply the Pareto principle or the 80/20 Rule. It means that in anything a few (20 percent) are vital and many (80 percent) are trivial.

That is sort of what I did when I bought my car last year. My note was for $350 a month but I sent them $500 a month instead. Then a few months ago I looked at what I had squirreled away in savings and saw that it was enough to pay off my car! So I did. For a few months, I didn't really have much money after paying the bills to put into savings, but now my savings is slowly increasing again. I figure that by trying to pay off my debts quickly, I will be saving interest. I think when I get $1000 in savings I might look into a year or 6 month CD.

I agree to the previous responses, that it is better to pay off your debts faster as it helps you save more rather than saving first and letting the interest pile up.

The best idea is to do both, but debt is the higher priority. Debt has a way of getting larger with time. If you're talking about a credit card debt, something that cost you $500 initially can end up costing over $1000 if you only pay a minimum or just over the minimum payment. But having some money saved is a good idea in case you become unemployed and need some help getting by until you find a new job. So I would personally advise (going along with your example) putting $300 toward debts and $100 toward savings until your debt is elminated. The longer you carry your debt the more it's going to cost you.

Well since you are most likely to pay more interests on yout debts than how much you can earn with your saved money in bank or with investments, it is surely better to pay off debts first and then thinking about saving money. It is a completely different thing if you use that money for some kind of activity that you own that has a return bigger than the interest rate of the debts..

Agreed on the interest thing. I would tend to try and balance it to where I was paying off my debts as well as starting a cushion while doing so. By paying off your debts quickly saves you the interest but in the mean time if you encouter the need for some extra money, it is there so you don't have to use a credit card. If you trying paying off things, while still using a line of credit, you will just spin your wheels.

I am glad I don't have debt. If I did, I think paying it first would be the smarter thing. I would want to get it over with, plus, I would like to save on interest. Right now, most of my money goes towards saving. I think it's a good idea instead of spending it all in one place.

The rule of thumb is, generally before you save or invest, be sure that you are debt-free and at least you have 6 months of salary allotted to your emergency fund, which you usually use when you suddenly lose your job or a family member gets sick. Debts are really not that all bad. There is such a thing as a good debt and a bad debt. Bad debt is when you buy something that has no potential of increasing in value like credit card debts for durable or disposable items like clothes,shoes , etc. Good debt is a debt that builds wealth like home loans and business loans. I must admit I have debts right now and it is a good debt. I had a mortgage loan on my apartments which I have them rented. And would you believe the house is paying for itself. I'm receiving rentals twice the monthly amortization of the house. It is really up to you to use debt to your advantage. And if you decide to save, don't stock it in the bank, invest it. The interest in the banks is not enough to cover the inflation rate. The value of your money today is not the same 10 years from now. So invest at an interest higher than your country's inflation rate.

Well, I think paying debt have to take as priority than saving money. It's good if your debt can be paid via credits, but if you have a whole money needed for paying the debt, I suggest just pay it at once. After your debt cleared, then you can manage your financial balance between your daily needs and saving some of them :)