Today, people keep wondering which ones of these two should come first – should you be paying off your debt or save first? It is used to be that financial experts stated that paying off the debt first is more important. After all, it does not really make sense to have your funds invested at a 10 percent return while you end up paying 20 percent as interest on your credit card debt. Once you think about it, it does make sense. The only issue is that things are not the same as they used to be a decade ago even 4 years ago.
You have no other option, but o make payments on your credit card every month and you should be working towards not carrying your credit card balances. But before you stay paying them off insistently, ensure you have a rainy fund that contains at least 1000 to 2000 dollars in it. As the credit card companies are behaving these days, you cannot be certain that you will have an open account or accessible credit tomorrow. It is entirely up to you to ensure that you have put money away for all your unexpected expenses.
If you have too much of debt then one of the best means to get started is by eliminating it with the help of a credit counseling service. These companies are basically non-profit organizations and are out there in the businesses of assisting people easily getting out of debt. They will be consolidating all of your unsecured debts and require you to make just one payment per month to cover all of these accounts. The payment will be around 2 percent of the total debt that is enrolled. This amounts equals to or lesser than your current minimum payments.
The difference with a credit counseling service is that your interest rates get lowered to approximately 10 percent and your fees eliminated. This saves you a lot! It is something that helps you make your payments consistently through the rest of the program. They do not decrease as the amount of debt diminishes like they do while you are making credit card payments to the lenders yourself.
If you are still wondering should you pay off debt or save first? The answer is that you must do both. You should not pay off your debt aggressively till the time you have some funds saved for the rainy days. Once you get in that position, go for it and get it done.