When you have a large amount of debt, it can be overwhelming. Everyone wants to be able to save money, but the looming threat of that debt can make it hard to commit to a real savings plan. So what should you do if you want to pay down debt but also have some savings? The truth is, it depends on your individual situation.
Paying Off Debt
In general, focusing on paying debt is a good idea. This is especially the case if you have high-interest credit cards. Just paying the minimum balance each month means you’re going to take longer to pay everything down, and the interest will keep adding to your total each month.
If you only save money and try to avoid debt, your debt will just continue to pile on and you’ll be digging yourself deeper in a hole.
Saving Money While Paying Off Debt
Of course, just because you’re paying off debt doesn’t mean you can’t save some money on the side. Paying off debt and saving a little is usually a good plan for managing your money. Then, when your debt is finally paid off, you already have a savings plan in place that you can put more into now that you have less payments to worry about.
How to Figure out Your Savings Plan
When you’re paying off debts, it can be hard to figure out a good savings plan. Generally, it’s a good idea to figure out how much your net income is per month. Then you calculate your expenses, including how much you need for bills and necessities. Then you can use what’s left over to divide up between debt and savings. If this seems a little overwhelming, you could always use a tool like a savings app to help.
Use a Savings App to Figure Out Your Finances
Savings apps are great for helping you manage your money. A good savings app can help you break down your finances on a monthly, weekly, or even daily basis. This way you can easily figure out exactly how much money you’ll have to put toward both your debt and your savings.
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