Most of us want to save money. We want to save money for that new gadget, for a new house or car and we want to save money for retirement. So what steps should we take to do so?
- Pay off High-Interest Debt: Each and every payment made to reduce the balance on a high-interest debt instrument is making you the equivelent of that interest rate on that money. Paying 26% on that Visa? Pay $1000 off and you just made a 26% return on your money. Remember that just because you don’t see the savings, doesn’t mean it doesn’t exist.
- Begin a Structured Savings Ladder: There are several different modes of savings, with each its place and reason. The lower rungs of the Ladder are the most fluid with the highest rungs being the least fluid.
Step one is easily broken down. If you do not pay off that high interest rate debt, you will pay the interest on it. No ifs, ands or buts about it. By paying off that debt, you no longer have to pay that interest and gain an immediate return on your money. An added bonus is that you will then have more money the next month to begin your Savings Ladder.
It’s important to carefully examine the remaining debt you have as some debt, even though not classified as high-interest, may be higher interest than the best savings instruments. It may not be feasable for you to pay off all of these, but a good idea might be to split your budgeted money for savings between the savings and the debt.
[tags]Savings, Credit, Debt, Savings Ladder, Interest[/tags]
{ 2 trackbacks }
{ 0 comments… add one now }