Why Paying Off Debt Before Saving Is Essential
The problem with debt is that often the interest on it is high – really high! In order to become financially healthy we must first pay off all loans and credit card debt. The only exception to this is with mortgages and car leases, which are ongoing costs (unless you are in arrears, in which case pay these off first too).
Generally as a rule, pay off the loan with the highest interest rate first and then work your way down through to paying the loan with the lowest interest rate off last. Do you have it as one of your goals to pay off your debt? (HINT: If you don’t I would add this as your number one goal now and amend your ‘Monthly Savings Budget – Five Year Plan’ accordingly.)
Then, and only then, begin the exciting process of saving.
Do you have debt to pay off? Have you looked at what interest rate they are charging you? Have you used the spreadsheet to calculate how long it will take for you to pay it off? How do you feel about your debt? Please share your thoughts in the comments below to gain encouragement, insight and support from our community, we’d love to hear from you.
Following using psychology to transform my life, I founded Accessible Psychology to help empower others to live the life they long for. My journey is living testimony that no matter where you are, absolutely everyone can apply psychology in order to lead more fulfilling lives.
Oh and I love Oprah, Marie Forleo, Tony Robbins and lovely people like you!