2008 Brings With It New Financial Decisions
April 10, 2008
2008 may be remembered by many consumers as a financial turning point.
Faced with rising housing costs and a soft housing market, a number of homeowners have turned to credit cards to help fill the financial gap. But such a strategy can lead to plenty of financial headaches later on, including out-of-control credit card debt.
If you find yourself facing high credit card bills, you may be wondering whether it makes sense to put money in savings. After all, credit card interest rates can be quite high and they can sap the life out of your bank account.
On the other hand, it’s important to have a nest egg if your financial situation should worsen. The last thing you want to do is to try to charge your way out of a financial mess.
Some financial counselors this year are saying that it’s best if you attempt to pay down your debts and invest money into savings. It makes financial sense to have an emergency fund to take care of unexpected car, housing, and utility expenses. In addition, if you should lose your job, you want money in the bank to draw upon to help you through the financial pinch. Therefore, consumer counselors recommend socking away money in an emergency fund while continuing to pay on your credit card bills.
While it is true that you may lose some money in interest following such a strategy, you’ll have the peace of mind of knowing that you have savings in place should the unthinkable happen.
However, that does not mean you should settle for paying the minimum on each of your credit cards. Instead, financial experts recommend making a concerted effort to pay off the highest-interest balances. Once you pay off a card, use the money you once used for a monthly payment and apply it to another credit card balance.
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