Paying down debt vs. saving money, explained in plain English

If things are going well and you've got money left over at the end of every month, you may be wondering if you should pay off debt or save. How do you choose?

If, on the other hand, you work for a start-up and your spouse or partner is a freelancer, prioritize saving for the emergency fund. You should have three to six months of expenses set aside, particularly if job loss would mean not being able to cover expenses. Why understanding asset allocation is key There is clearly no shortage of people in today's society who are comfortable with debt.

Sometimes determining if the carry works for you or against you is simple. For example, if you know you'll pay more in interest on the credit card that charges 19.5 percent than you'll earn in a money market, taking care of the debt obviously makes sense. On the other hand, if you've taken out a no-interest car loan, the carry works in your favor, even if you're just investing in a certificate of deposit.

Source: Loan Digest (loandigest.net)

If you have debt you are paying over 5% interest on, pay down debt, otherwise invest it

Interest earned on money saved compounded. Interest saved on debt. Safety cushion of higher debt limit. Better credit score & lower interest opportunities. Opportunity costs. Leveraged investments. Slim.

Save is the right answer unless it’s credit card debt

I learned at an early age to never allow debt to control my life. I’ve been up to my neck in debt at one time and focused on eliminating debt. Yes, you’ll sacrifice but it’s worth it in the long run. Today with rates very low you might want to consider consolidating debt. debt

Save in a tax free retirement account. IRC7702 and live a debt free life, without car payments, credit card payments, and mortgage payments.

Lever up and roll the dice. Paying down a little debt won’t change your life. Buying Netflix 10 years ago could have made a difference.

Pay off the debt.

Invest whenever possible.

Pay off debt. Next question.

Depends on the rate of return you can get with your cash.

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