Money Matters | Miki's Hope

Money Matters

Monday, April 29, 2013

You know that paying off your debt is important—especially if you plan on retiring soon. The last thing you need is to try to finance your retirement with a bunch of debt payments hanging over your head.

But what if you’re just starting out? What if you’re looking for that first job or internship? Shouldn’t you be saving every penny for a rainy day? Can’t your debt payments wait? Isn’t it better to save now and pay off your debt later? Surely making the minimum payment each month is more than enough…right?

Should you save or pay off debt? The questions is something that every person is going to decide for him or herself at some point. The truth is that you can do both at once—you just have to figure out which one is going to take priority.

So how do you do that?

If you’re just starting out, it’s good to get into the habit of saving early. This way you can quickly build up an emergency fund (that can later become a “nest egg”) so that you don’t have to panic if something unexpected comes up.

Saving Tips

1. Save 10% of every paycheck. Put it into savings before you even have a chance to figure out what to do with the rest of the money you’ve earned.

2. Budget more than you’ll think you have to pay. This way if, say, your electric bill comes in a little high you won’t panic. When you come in under budget, put the extra into your savings account.

At the same time, you don’t want to only pay the minimum due on each of your debts. This just stretches out your debt for a longer period of time. It’s the creditor’s way of tricking you into repaying way more than you actually spent. Depending on how much you owe, you could end up repaying two or even three times more than you spent.

So what do you do?

1. Always pay more than the minimum due. Even five or ten dollars more than the minimum due is helpful.

2. Try to pay at least the minimum due plus whatever you get charged in interest and fees each month. Check your statement to find out how much this is.

3. As one debt gets paid off, reallocate its monthly bill payment equally across the debts you have left to resolve.

4. Negotiate for lower interest rates and fees. If you have a steady repayment history, you should be able to do this fairly easily—because the creditors don’t want to lose your business!

Here’s the truth: employers check your credit report now as well as references, your background and your reputation. This is why you can’t simply ignore your debt while you work to save up for your future. At the same time, you don’t want to have to re-use up all of your credit in the event of an emergency, which is why you need to save money as well.
Don’t worry—you can do both. It just takes time and finesse

This is a guest post, however I totally agree with all of it!. For more information please check my Disclosure Statement. Our giveaways are in no way sponsored or promoted by Facebook.


Happy Gardening, Kim said...

And don't live beyond your means!!

Yeah right, me and my beer budget with a champagne taste!

Great article - wished all young adults just starting out could read that!

Sherryl Wilson said...

All true points! It is easier to never get into the pit than to climb out!

MzBaker said...

Great blog post sharing, its hard to not live beyond your means sometimes when everything is so expensive today. We try though that's for sure and only if we had regular paychecks to put some away. Soon though Soon

Taty said...

Thanks for the tips. Taking ownership of over budgeting

Chubskulit Rose said...

Saving is always my thing ever since I was a kid but paying off debt is a priority for me. What's the point of gaining few dollars of interest for your savings if you have to pay hundreds of dollars of interest to your debts. But of course setting aside some money for rainy days is a must!

Tamara @ Mommyland said...

These are awesome tips, we have recently lost part of our income which at in my head was far worse then paper since hubby had been taking account or it in the budget and keeping on top of things. I will be passing this to him as a reminder since he is the 'bank man' in the house. I do know how it all works and could do it but he does it better lol, ok and he does it at work on graves so I don't even have to think about it and it gives him something to do when he is bored at work.

Trendy Cyndie said...

I love this post about money tips. I am frugal so I try to save!

JC said...

Debt is such a huge issue in the lives of so many it's crazy. This is lots of great advice! I especially love saving 10% of your paycheck because it's so doable but we don't even attempt to but would pay off big in the long run.

Corinne said...

Great tips! The only thing I would add is to set up automatic transfers to savings. If the money automatically leaves your account, you will try harder to make due without it but can access it if you really need it. If you wait to put your "extra" cash away after you've paid all your bills, you will find that you rarely have extra.

Mommy Evolution said...

All great points for people managing debt!

Mel Cole said...

Yeah, gotta finish off paying mortgage first. Great article! It's important to keep the "Save-More-Money principle"!

Unknown said...

Such great tips!

Another one... every "surprise" bit of money you come into (bonus, tax return, etc.) allocate at 90% of it to the debt and keep 10% as fun/splurge money.

Wishing you a lovely day!

Melinda Dunne said...

I am actually in the middle of reallocating funds to save more and pay more off. It is really tricky sometimes to do.

Nova said...

That is very true, we should pay off our debts to enjoy the money we work hard for and once being retired, we don't worry about them anymore.

Liz said...

I feel really special! I knew all of them but #3. VERY GOOD TIPS.

Healy Harpster said...

Thank's for this valuable tips and ideas. It's always wise to save some money for future needs!

Celebrate Woman said...

Once you start doing it actively, proactively, life becomes easier in a way that there are things we can control.

Excellent tips that need to be incorporated into anybody's life.

amiableamy said...

Great suggestions Micheele :-)As for me, I tried to pay it off and at the same time save a little extra every month. I am not certain what future holds for my family so; we have no mortgage and no car payments ... all fully paid , what's left are normal household bills.

Becca Wilson said...

My hubs and I got ourselves into debt way too early on with credit. We got our first place together and were both working and put a lot of our projects to fix up the place on credit. Then things got bad and my hubs lost his job. Now we both have debt that we need to fix before we can even dream of owning our own place.

Sofia @ From PDX with Love said...

I am a frugal gal and always keep a close eye to what we buy and look for other cheaper alternatives. Thankfully my husband is a financial mastermind and he has all the savings figured out! We don't always have enough to put away, but his company is starting to pick up and soon we will be able to grow our savings account, phew!

Unknown said...

Great advice! Although it is tempting to put every extra penny towards debt, it is smart (and often necessary) to have some money stashed away in savings for emergencies. I am glad you've laid out a method to do both.

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