My husband and I have no savings account. (we did but had to close it due to an unexpected bill) Should we use all our extra money (which isn’t a whole lot) to open a new one or start paying down some bills?
My husband and I have no savings account. (we did but had to close it due to an unexpected bill) Should we use all our extra money (which isn’t a whole lot) to open a new one or start paying down some bills?
{ 9 comments… read them below or add one }
pay down your bills. Then start your acct
A lot of personal finance books say that you should always pay yourself 10% first. As a general rule, this is smart because it will be the best for you in the long run.
Realistically though, if you are paying more in interest on the bills than you will earn from your savings account, then it would be smarter to pay bills down first. Be sure to pay down the credit card bills and the ones with high interest rates first.
It can be so important to have some cash set aside if anything unexpected happens.
If you don’t have any cash that you could use for a new starter motor for your car, or whatever little thing might come up, then save some of your money.
If one of your bills is a credit card, then put some of the cash in a saving account, and then pay the balance down on your card. This will not only save some interest, but also you can refrain from spending the extra available credit on the card… another source if an emergency comes up.
Sometimes, your own money in a savings account is the best resource, so in addition to putting some of your money now into one, add a little, whatever you can, each month. someone mentioned a $1000, and that’s a nice number to shoot for.
Once you have that much in savings, then pay all the extra money you can to the highest interest bill you have.
Pay off all your bills to avoid late charges and interest. There is no point in saving while your debt continues to accumulate, it’s just putting you even further in the hole. Do everything you can to pay it off… save money off your grocery bills, don’t buy anything you don’t absolutely need for a few months until you are completely debt-free.
I would recommend follwoing Dave Ramsey’s baby steps…
1) Save up $1,000 emergency fund
2) Pay off your bills using the “debt snowball”.
3) Increase your emergency fund to 3 to 6 month’s of expenses
4) Pay off the house.
http://www.daveramsey.com
PAY BILLS! Make sure you pay bills on time or your credit will fall drastically.
Savings is important, but work on your credit first because if something unexpected ever happens again, others are more apt to extend you credit and you can build your credit history. THEN try to put away money so you won’t rely on credit so much. A good credit score by paying off what you owe is a valuable thing and will benefit you monetarily.
Both !
Put a little in savings to start, and use the rest to pay off the highest interest bills.
Then commit to regular (even if small) savings deposits.
One step at a time..
Good Luck
pay your bills especially if they are high interest. You can always take an advance in case of a real emergency
PAY DOWN BILLS!!! interest rates on bills are much higher than the money you will make on a savings acount. When you reach the point that all your bills are paid down, contribute to retirement plans and mutual funds. However, a form of savings is definitely necessary. You should open a money market acount. They offer higher interest rates and the same liquidity as a savings acount.