Money is a deeply personal topic. This is a topic that has divided many families and caused struggles in many communities. The way people prioritize their money is different because people have different beliefs. There are millions of people that believe saving money is more important than paying the debts they have accumulated. There are just as many people that believe that saving money should come after paying one’s debts. The beliefs that people have will influence the way their money is spent.
Saving money for most people is a priority. They understand that without money saved in the bank, they could have an uncertain financial future. They also know that saving money takes dedication, consistency and discipline. The biggest question that most people have when it comes to saving is when they should do it.
Paying Debts then Saving Money
Millions of people are in debt. Their debts come from many different places. There are some that have student loan debts, home loans, credit card debts and debts from medical bills. The most common debts that people have are student loan debt and credit card debt. Because they have debts, they don’t feel as if they should focus their money on saving for their future until those debts have been eliminated.
In theory, this is a great way of thinking. A person’s net worth is calculated subtracting a person’s total debt from their assets. If their assets are less than their debts then they may have a negative net worth. Most people want to have a positive net worth and will work hard to make that dream come true.
If paying off debts is more important than saving, there should be a concentrated effort to pay off those debts as soon as possible. It is possible to pay off debts sooner than they are due. There are many different ways that debts can be paid off fast.
1. Budget: Those that would like to pay off their debts faster should stop spending needlessly and concentrate their monies on paying their necessary bills and paying more than the minimum payment on the debts they want to pay quickly.
2. Prioritize Debts: There are some debts that people want to pay faster than others. Those that want to do this should take the time to list the debts they want to pay faster in order of importance. Once they are listed, with current balances, a payment schedule should be made. As soon as people decide what they are going to pay on the debt each month, it should be paid. If it’s a debt that has gone into collections, attempt to make a settlement payment to clear the debt for good.
3. No New Debts: Those that are concentrating on paying off their debts should NOT CREATE NEW DEBTS. This is very important. It makes no sense to pay off debts and create even more in the process.
Saving Money then Paying Debts
Saving money is more important to some than paying the debts they owe. Those that think to save a certain amount of money before they start paying their debts often think they are saving for their financial success. They don’t want to compromise their financial future by concentrating on what they will pay off eventually. There is nothing wrong with that way of thinking.
Those that choose to save money before paying off debts should save with a specific goal and plan in mind. They should not be saving money when they have bills that are past due and putting their savings in jeopardy. Those that choose to save money before paying their debts still have many of the same debts as others but they may be in better control of paying them than others. Many of those that are saving for their financial future have a budget in place and are paying their accumulated debts off at a consistent pace.
When people choose to save before they pay their debts, they should never lose sight of their debts and their current balances. This is very important. As soon as they lose sight of their debts and it gets out of control, the future they are saving for could be in trouble. Those that choose to handle their finances this way should also consistently pay towards their debts as they save.
Money is a very personal subject for everyone. There is no right or wrong way to address saving and paying debts so long as they are both address and goals are met.