It’s the age-old dilemma: when trying to set yourself up better financially for the future, do you pay off debt first, or do you try to grow your savings? While you’ll get a different answer, and different reasons for it, from just about any expert you ask, it is possible to do both. you just have to be smart about it, and make both a priority.
Make a budget that makes room for both
Everyone knows that everyone has to have a budget; they’re the backbone of good financial planning. If you don’t have a budget, you don’t know where your money’s going, or where to put it when you do get it. Make a budget and still make sure that you’re not overspending on coffee or other things that aren’t necessary. But more importantly, at least when you’re trying to focus on both saving and paying off debt, make sure you make room in your budget for both paying off debt and saving. If you set up a column for each, and set aside a certain amount of your income for both, instead of putting that collective amount towards just one, you’ll be well on your way to getting all your financial goals accomplished.
Consolidate your debt
One of the best ways to pay off your debt is to consolidate your debt. It’s nearly impossible to pay off your debt when you’re paying only 2-3 per cent of the principle amount each month, but still paying enormous amounts of interest on top of that. When you consolidate your debt, you can still pay off your debt, you’ll just do it faster and for less money in the long run.
Work on credit repair
Getting out of debt won’t do you much good if you’re not also working on getting your credit back into good shape. The good news is, that the further you get out of debt, the more you’ll be working towards credit repair. Starting on fixing your credit now can also help you get better interest rates on new loans in the future, which can also save you money in the long haul.
Put your debt repayment and savings plan on automatic
Every time you get a paycheque, there’s a certain portion of it that automatically goes towards your taxes. While still a sore spot with some, most people do just accept this as fact, and this mentality can be put towards your debt repayment and savings plans too. Simply set it up with your creditors or your bank to have a certain percentage, or certain amount, put towards the plans automatically. Yes it may sting at first; but soon the only reason you’ll notice it is because you’re furthering your financial dreams every single time you get paid. This is an especially easy option today with so many paycheques being direct-deposited.
Too many people think that you must tackle your debt, and then start building your savings; or vice versa. But when it comes to your financial goals and dreams, there’s really no reason why you can’t do it all, and work towards more than one at a time.
