Trading tools on credit card debt relief midounam yahoodebtconsolidation com
|
|
|
|
Dont Save When You Owe Money.
 Humans are peculiar animals. We don't always do whats right for us - rather, we do what feels best, and try to blank out any reasons why it might not be the right thing to do. Perhaps that's why there are so many people who have both savings and debts.
Its a Matter of Psychology.
Yes, it feels better to save. Saving makes you feel like you're constructing a foundation for your future, while paying off what you owe feels like you're giving your cash in to a hole. That money is for the kids future, or for doing up your place of residence, or whatever else - and it's in an savings account bringing in 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 accounts that will let you have interest rates anywhere near as high as the ones credit cards take from you. Heres a question: if you have $10,000 in a bank account earning 5% per year and $5,000 on a credit card at an interest rate of 20% per year, how much cash do you have? After only five years, the answer is effectively nothing - your debt would have grown to in the area of $12,500, the equivalent total that your savings are currently worth.
You might not think it now, but it actually is a good deal better to pay off your debts. If you used one half of your savings to pay off that debt, youd be in a much better position that it's really astonishing. You avert five years of compound interest on the debt, but you still get to hang on to $5,000 in your savings account, making interest - after five years, that's around $6,380.
If youd still rather keep your savings intact rather than using them to pay off your debts, ask yourself this simple question: is your pride worth $6,380 of your familys money?
Consider Your Financial Well-being.
Once you get enough cash to pay off your debt, theres absolutely no logical reason to keep 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 financial resources as possible to be savings, not debts. If your savings account and credit card are with the same savings bank, then youre effectively paying for the privilege of borrowing your own cash from them. Why on earth would you do that?
There are additional advantages to getting rid your debt with savings. Youll be less distressed about your debts, and your credit report will show that you were able to pay everything back - getting you a much better interest rate if you should need to go into debt again.
I know it can be hard. You just need to bear in mind that any money you've saved hasnt actually been saved at all. Its money you should have been spending rather than making purchases with a credit card. Yes, it feels much worse to spend money thinking that youre spending away your nest egg - but always remember that when you use a credit card to spend that same amount of money, youre spending away your future, plus interest. Anyway, if you've got the debt, then that cash in the bank has already been spent - stop denying it to yourself.
01>
02>
03> |
|