Why You Shouldn’t Neglect Your Savings While Paying Off Debt

Paying Off Debt

I was recently doing my usual daily perusing of Facebook when I saw a bunch of hometown friends sharing a financial article that argued people should pay off all their debts before saving for emergencies.

At first, I was totally shocked. As a finance expert, I get that paying off debt is important, but it shouldn’t be at the cost of your own financial detriment. Keeping an open mind, I clicked on the article and read it anyway.

It basically stated the following: If you have high interest debt, focus on paying it off as quickly as possible. That may mean neglecting your savings for a bit, but at least you get rid of high-cost debt.

This post has been written by the ever-talented, Amanda Abella. Enjoy!

Why Neglecting Your Savings In The Name of Paying Off Debt Is a Problem

While I get the argument that paying off debt . . . → Read More: Why You Shouldn’t Neglect Your Savings While Paying Off Debt

Three Ways to Pay Off Your Debt

hate debt

Are you trying to pay off your debt? If so, then you might be wondering how you should proceed. What’s the best strategy for paying off your debt?

As it turns out, there are three popular methods: the “traditional” method, the “snowball” method, and the “annoying” method. Let’s look at the pro’s and con’s for these popular debt payoff techniques, so that you can decide which one is best for you.

Traditional Payoff Method

Under the traditional model, a person would first make a list of all of their debts, from highest-interest-rate to lowest-interest rate. For example, you might list:

Mastercard, $12,000 balance, 14 percent APR Student Loan, $32,000 balance, 8 percent APR Car Loan, $3,500 balance, 3 percent APR Loan from Brother, $5,000 balance, 0 percent APR

A person would make the minimum required payments on all of the above loans, and then use additional money to . . . → Read More: Three Ways to Pay Off Your Debt