It’s no secret that debt is on the rise in America. According to Northwestern Mutual, the number one cause of debt for ages 25-34 are credit card balances. For those ages 35 to 49, home mortgages are the number one source of debt.
One of the most common questions I get asked is “How much should I allocate toward extra debt payments AND still save every month into my cash cushion account?
It can be difficult to know where to start or what to do.
I’ll be the first to agree that holding debt makes saving that much more complicated. However, there are ways to make both paying off debt and saving for the future a possibility. I dive into this financial mystery in this episode. Enjoy...
SOME BONUS TIPS:
Which is More?
One of the first things you need to look at is the difference in what you're likely to pay in interest on the debt versus what you can earn on savings or investing. If your saving say $100 a month but paying $150 in interest on your debt the saving becomes a negative.
Prioritize Debt Reduction
Make a list of debts starting from highest to lowest interest rate. It is best in your favor to pay off highest interests first like credit cards and loans.
Take Steps Towards Saving
To start saving money, you need to think of reducing other expenses that you are paying for no reason. Cutting down all such expenses and making a list of things you need to pay for and how much you save in the end is one of the perfect things to review in your weekly money dates.
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