Trading tools on credit card debt problem consumer debt problem searchie net
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Dont Save When You Are in Debt.
 Human beings are peculiar animals. We don't always do whats right for us - instead, we do what feels best, and try to blank out any reasons why it may not be the soundest thing to do. Perhaps that's the reason there are so many people who have both savings and debts.
Its an Issue of Psychology.
Yes, it feels better to have savings. Saving feels like you're building a cornerstone for your future, whilst paying off your debts makes you feel like you're giving your cash in to a hole. That money is for the kids future, or for improving your place of residence, or whatever else - and it's in an bank account earning a useful rate of interest. What could be unreasonable about that? Lots, if you have debts.
Dont Be Fooled.
There are virtually no savings companies that will give you interest rates anywhere near as high as the ones credit cards charge. Heres something to consider: if you have $10,000 in a savings account realizing 5% per year and $5,000 on a credit card at an interest rate of 20% per year, how much money do you have? After only five years, the answer is effectively nada - what you owe would have grown to in the area of $12,500, the equivalent amount that your savings are now worth.
You may not believe it now, but it actually is much better to pay off your debt. If you utilised half your savings to pay off that debt, youd be in such a better position that it's really amazing. You avoid five years of compound interest on the debt, but you still get to keep $5,000 in your savings account, earning interest - after five years, that's roughly $6,380.
If youd still rather keep your savings intact rather than using them to pay off your debts, ask yourself this elementary question: is your pride worth $6,380 of your familys cash?
Think of Your Financial Well-being.
When you have enough money to pay off your debt, theres absolutely no reason to hang on to it. Debt is for people who don't have the money, and need 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 banking company, then youre effectively paying for the privilege of borrowing your own money from them. Why on earth would you do that?
There are additional advantages to paying off your debt with your own savings. Youll be less strained 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 hard. You just have to remember that any cash you've saved hasnt actually been saved at all. Its money you ought to have been spending instead of buying things with a credit card. Yes, it feels much worse to spend money thinking that youre spending away your future - but always bear in mind that when you use a credit card to spend that same money, youre spending away your future, plus interest. In any event, if you've got the debt, then that money has already been spent - stop denying it to yourself.
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