Would you rather save or pay off debt. Which one first?
One thing I am always scared of is how to pay off my debt. My mind is always there every second until I am done settling all, then I would be relieved.
Let me put the above question this way — “Should you clear all your savings to pay off your debt?”
I saw this question in an article somewhere and I was willing to bring in my opinion here even though I left a comment based on which one I would go for first or do both.
Many people are so addicted to borrowing and end up in debt. While some are wise to use it in starting up a business, others do not have a valid reason why they are taking a loan. I have someone who takes loans from apps just to buy clothes and expensive items, believing that her boyfriend would pay her back at the end of the month which she would use to settle her debt. For that purpose, I don't think the lady is sensible in deciding on that. Her sole aim is to oppress and nothing more. For such a lady, what if her boyfriend broke up with her after knowing what she uses the money for, what will happen next?
This is why we have many articles, especially on Hive that talk about saving for emergencies so you don't have to go into debt since you have something on ground to help you whenever you need it.
Paying off your debt is important, but you have to build your financial resilience and make plans for the future. Many people are so hooked up to debt that paying it off can feel like it has to be their financial priority but you should do some saving while you are paying down debt.
Saving especially for an emergency has the capacity of keeping you from going deeper into debt when expenses you never expected pops up.
I asked a friend this question and here is what she said; “you can still earn a little interest in savings than when you pay back your debt. So, I will suggest paying off debt first before starting to save.”
Inasmuch as she has a point there, I still won't agree to paying off debt first, then coming back to save. What if you keep paying off debt and still getting to pay over and over again when you keep borrowing or getting a loan except your business is the one that yields good returns where you can easily pay with your profit? Aside from that, it is still not fair enough to pay your debt first. There is a way around this and that is what my answer would be and something I can do.
According to the book “The Richest Man in Babylon” by George Clason, he said it is ideal to save 10% of your income. I love how he put the word which sounds lovely to me and has been something I have held onto and always remember. It goes thus — “10% of what I earn is mine to keep.”
What? Isn't that too much to put into savings considering the huge debt on my neck? Perhaps someone with the curious question this morning.
Well, you don't have to start saving big. Start small and then pay your debt bit by bit until you are done clearing all. With this method, you are using a stone to kill two birds at a time.
Everything I am saying here boils down to cutting down on your expenses, especially those unnecessary expenses on your list. Once your income arrives, remove within the range of 5-10% for savings, and budget the important expenses that could take you till you get your next income. Use the remaining one to pay your debt bit by bit. Continue doing this till you are sure of freeing yourself from the debt which could bring comfort to you knowing you already are saving.
The general rule of thumb here is to do both. Pay off debt while building your emergency fund through saving.
Thanks for your time on my blog.
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everyone with hi or her own opinion, for me i wouldn't save it i would pay up my debt and know i am free from debt, cause it would lay heavy on my heart knowing i have money somewhere and the person i am owi ng is in need of the money, so i would pay ba ck the debt incase of another time i need some help from the person, so that he or she wouldn't relent
You are right. Everyone will not act the same way. We have different opinions and I totally understand each other´s perceptions. Thanks.
yea, you are welcome❤️
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My mind is never at peace if I owe someone especially when I don't seem to see a way around it to pay up... So I never dare to own too much amount of money 😂 if it's little, the person would even almost forget the money with me.
But I always try to pay up what I owe so I can be sure the money I have is mine to spend 😊
That feeling nor get part two haha... I owe noone!!!
Exactly. My mind will always be there till I am free. There is nothing as sweet as having money in your hand and knowing it's yours and no one is taking it. Debt is a killer especially when you don't have where to pay back. Lol
I love spending my money than using it to settle debt. 😁
Thanks for your feedback 😊
Do both it is. To kill two birds with one stone. Both of them seem important but savings carries the most important. Paying of debt is kind of urgent but not that important. In an ideal way, doing both is the best solution.
The best is to start planning on paying the debt before the due date so the lender won't have to hurry you up in paying all at once. Thank you for your contribution.
My opinion is that I will always follow the rules that say 'don't put all your eggs in one basket.
I won't use all my money to pay off debt so that I won't be short of cash, if you do that you can also borrow another money if you are broke.
Pay 70% off and you have the rest to guide by saving in something that will yield interest so that you can pay the rest of the debt some other time.
Though my mind it's not always at peace whenever I owe, and I don't like borrowing.
Debt is very bad stuff, I won't advise anyone to inculcate that habit.
I hope we shall all live a financial breath through life
I love your contribution ✌️👏👏
This is what I would definitely go for because there is possiblity you keep borrowing when you use all your money to pay off debt. You will end up with more debt and that is really a bad stuff.
Amen 🙏
Thank you 😊
Thank you dear
For me, it depends on the kind of debt. If it's a bad debt and has exorbitant interest, it should be prioritized or it will keep one tied down.
Richest Man in Babylon is a great read. ❤
!CTP
I enjoyed reding the book that I keep glancing at it once in a while even after reading it to the end. Thank you for your comment ma.
It's one that you won't get tired of reading time and time again :)
You're very welcome and thank you too
Debt comes with interests more reason we have to pay expect we enjoy robbing ourselves of our future... preferably I do both simultaneously I pay down my debts and save. paying down debt without savings is slavery. one will just keep coming for more. I enjoyed reading through and I hope her boyfriend never finds out😁
Well, I think it depends on the kind of person you are owing or a company or school. If it's someone that won't give me peace of mind while I pay bit by bit, oh boy .mi will focus on the debt and be free like a bird 🐔🕊️, but if it's a debt that gives me room for instalment payment, I will be paying and be saving small small Incase of emergency expenses such as health matters
You are right. It now depends on the kind of lender one is involved in. Thank you for your opinion ma.
It's a pleasure 😘
Meh. A lot of factors have to be considered in this context. Is it a single or family person? What is their living condition? Left to me, if my debt is much and maybe has an accumulative interest rate, it won't be wise on my part to be saving for a rainy day when it has already come. All I'd be doing is committig financial suicide given that rates increase and wait for no one. So I'll take care of my day to day expenses and cut down on a lot in order to clear the main problem and not accumulate more in the form of interest rates. When that problem is off, I restructure myself and make sure it never happens again. This was the tactic I used in settling a debt my mom and i got ourselves into. I wasn't working then, but she was and we applied this wisdom to pay off almost N500,000. So to me, Settle off the debts because you won't be able to save with a peaceful mind while an axe of bills hangs over your head. Came in from Dreemport.
Wow! This is interesting! You have made a good point and I can't agree less to it. There are factors to consider truly and we should go for what works best for us. Thank God you and your mom had to settle such exorbitant debt and it's off your necks. Debt is really a killer. May God help us.
Amen!
@deraaa
I really appreciate this. Thank you
!PIZZA
Pay off debt first... It would be easier to save if you are not paying anything...better cancel any credit card too. That's another money stealer lol..
Exactly. I agree to the cancelling of credit cards or else, you might end up jumping into more debts 😅
Peace of mind is priceless Busayo, in my opinion I would pay my debt and be free with no restraints than to save with the clutches of debt lurking around me.
What insightful post cheers 🥂
Dropped here via @dreemport
Yea, everyone to his or her opinion and we should respect that. Thank you so much for dropping yours too.
Even 10 Kobo I don't owe anyone... I dislike owing someone and I hate it too when someone owes me a lot. When I pay off my debt it looks like as if a burden was lifted out of my life and throw it away!
It's not really a nice thing though because you would be left with thinking consistently.
You will always think about the debt until it´s off your mind. I don´t owe too and even if I do, na small money I can easily return without trouble. Thanks, dear for your input.
My pleasure princess
That lady is clearly not sensible and such a person cannot save. She's depending on the money her boyfriend gives her monthly yet she's not reasonable. What if they broke up? How will she stand? She will find the next guy willing to give her money monthly?
Debt isn't a big deal. Most international organizations have debts. It's not so much about the debt but what you do with the money you took.
Don´t mind her oo... She go chop breakfast and her eyes go open. By then, she would realize how foolish she has been. It is what we do with the debts that matter. Thank you sir KP for your input 😍
People like her learn the hard way. She should be saving the money, she won't since she knows she's not the one working for it.
The money you didn´t work for is easy to spend anyhow. Wait until you start working and earning, she will know the difference.
Abi ooooo
Yes doing both is best if you can.
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