References on bad credit card debt debt debt freedom biz
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Dont Save When You Have Debt.
 Humans are curious animals. We don't always do whats best for us - instead, we do what feels best, and try to wipe out any reasons why it may not be the best thing to do. Maybe that's why there are so many people who have both savings and debts.
Its a Matter of Psychology.
Yes, it feels better to have savings. Saving feels like you're building a base for your future, whilst paying off what you owe feels like you're throwing your money into a hole. That money is for the kids education, or for doing up your house, or whatever else - and it's in an savings account realizing a valuable rate of interest. What could be wrong with that? Lots, if you are in debt.
Dont Be Fooled.
There are almost no savings companies that offer interest rates as high as the ones credit cards take from you. Heres something to consider: if you have $10,000 in a bank account realizing 5% a year and $5,000 on a credit card at an interest rate of 20% per year, how much hard cash do you have? After only five years, the answer is effectively $0 - your debt would have grown to about $12,500, the equivalent total that your savings are currently worth.
You might not imagine it at present, but it actually is a lot better to pay off your owings. If you utilised one half of your savings to pay off that debt, youd be in such a better position that it's really astonishing. You avoid five years of compound interest on the debt, but you still get to hang on to $5,000 in your savings account, bringing in interest - after five years, that's approximately $6,380.
If youd still prefer to keep your savings intact instead of using them to pay off your debts, ask yourself this simple question: is your pride worth $6,380 of your familys money?
Think of Your Financial Health.
When you get sufficient money to pay off your debt, theres absolutely no reason on earth to hang on to it. Debt is for people who don't have the money, and have to borrow it. Debt costs money, and savings make money - you want as much of your finances as possible to be savings, not debts. If your savings account and credit card are with the same financial institution, then youre effectively paying for the privilege of borrowing your own money from them. Why would you do that?
There are other advantages to lowering your debt with your own money. Youll be less worried about your debts, and your credit report will show that you were able to pay everything back - getting you a much smaller interest rate if you should need to go into debt again.
I know it's never easy. You just have to remember that any cash you've saved hasnt really been saved at all. Its money you should have been spending rather than buying with a credit card. Yes, it feels much worse to spend money thinking that youre spending away your future - but always remember that whenever you use a credit card to spend that same amount of money, youre spending away your future, plus interest. In any case, if you've got the debt, then those savings have already been spent - stop denying it to yourself.
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