Paying off your debt or saving money? This is a dilemma that many of us encounter in life. It can be a tough decision, depending on your financial situation, but with careful calculations made here and there, you can get a fantastic result.
So, how are you going to tackle a situation like this?
Here are a couple of solutions:
Paying Off Your Debt
It’s no surprise that paying the debt can lift some weight off your shoulders. Many Australians want to do it, and some even can, but most of us will be starving the whole month if we do so.
You will need to make some cutbacks on everything you buy. Want a fancy night out? Forget about it. Try to limit yourself to a hamburger and a drink and call it a night. Many of us spend our money on useless things and wonder why we can’t afford to pay our debts.
A good way to start getting rid of debt is by paying your home mortgage or any high-rate debt. Big or outstanding debts are usually the ones that you should be focusing on if you have the money. Do some math first so that you can be sure you’ll still have some cash after making the payment. And remember, the faster you pay your debts, the faster you will get to save your money.
Saving Money
While paying off your debt can be the right way to solve your situation, saving money to eliminate your debt with one blow can be another.
Saving money is easier said than done. When you have monthly bills to pay, and you also need to buy food and other necessities, saving can be really hard.
Bad decisions are usually the biggest factors that make saving such a hassle and a test of one’s financial control.
Be careful though, the more debt you avoid paying, the bigger it gets, so maybe the following method will be the right answer for you.
Snowballing
You can save money while paying off your debt, but there is a trick to it.
In order to save money, you need to start paying the small debts first. The more money you save, the more and bigger debts you can pay, and you will still have some money saved. This is a process that gradually increases in intensity, but eventually, you will have some money left aside and a big part of your debts paid.
This method is one used by many Australians because it’s a good mix between paying off some of the debt and saving money. At the same time, they can also get prepared for bigger debts.
So there you have it. A quick summary of what you can do when you’re faced with a financial dilemma. Paying off your debt is a smart move. Still, you can call on the snowballing method so that you can also save some money at the same time.
For any financial advice, call 1300 137 778 for a free consultation with NSW Mortgage Corp today!
