Save your money instead of paying off debt - a crazy idea huh?
This is for the majority of us that live paycheck to paycheck, have little or no real savings and are in debt.
If you have a large IRA and major investments, you already know how to manage this thing we call money. If missing 2 weeks of work might cause your power bill to go out, you are not managing money well, even if you always make your payments. You are hanging on.
Many “experts” tell you to hurry up and pay down your debt now! I disagree. If you do not have a savings set up, paying off your debt first will become something that will defeat you long term. Consider this… You have $5000 on a credit card and bust your tail to pay if down. You finally get the balance paid down to only $2,500 and feeling great! Then the car needs repairs and since you have no savings, you need to use the credit card. Right back to $5000 and you feel defeated! All that work and you are right back to where you started!
If you had saved $5000 first, when the repairs were needed you would have had the cash to pay for them. Sure you may have had to put the debt reduction on hold until you rebuilt your savings, but knowing you only owe $2500 on that card still offers a mental reward. Add to that the fact that your minimum monthly payment on that credit card is half of what it once was, you can boost the saving up quicker and the go back to attcking your debt!