If you had a small savings put back but it is enough to pay out a couple bills, would you do it or keep your savings and keep struggling check to check?

Original Post

 If you have the money in a traditional savings account at a bank-or under the mattress, the interest is so low it is pathetic, usually at 0.025%, with luck. And if the bills have a higher percent interest than what the bank is paying you, it would be best to pay them off. In other words you are loosing money by paying interest on the bills.

Best to you.

redcatcec posted:

 If you have the money in a traditional savings account at a bank-or under the mattress, the interest is so low it is pathetic, usually at 0.025%, with luck. And if the bills have a higher percent interest than what the bank is paying you, it would be best to pay them off. In other words you are loosing money by paying interest on the bills.

Best to you.

Although I agree, and I have some current credit card balances I'm paying off, I feel that even though I'm losing money on savings (I have several Ally online accounts), the peace of mind of having a savings account means more to me than paying money in interest. I know this isn't the typical or popular view, but it works for me.

This can be a tough one because I know many people who would say "you should never touch your savings account as that money is for your future"... but what future if you are running behind on your bills and can never seem to get ahead?

As mentioned by @redcatcec most savings accounts pay you such little interest. Over time, because of inflation, the amount of money you receive in interest is less than the rate of inflation so with a savings account you actually end up losing money in the long run with the way our economy is currently.

That being said, as was also mentioned, having a savings account can also provide peace of mind as you know if worse came to worse, at least you have that to fall back on.

That is why I personally have chosen to take a more balanced approach to my finances by saving, investing, giving and paying off debt.

Taking this approach provides me with even more peace of mind as my savings account becomes more something I can fall back on when I fall behind in my bills and my investments become my safety net and peace of mind.

Taking this approach means I end up paying off my debt slower but it also means that when the debt is gone, I will at least have some money saved and invested or in the worst case I should at least have a little something tucked away in investments.

The problem I think a lot of people face is they focus too much on one thing over the others and it ends up being unbalanced and throwing them off.

For example, one might focus so much on saving money and then they run into a huge medical bill that eats up all their savings and leaves them in a worse spot financially than before.

Or they focus so much on debt reduction and when something comes up and strains them financially, they end up in more debt.

That is why I believe taking a balance approach gives the most peace of mind and stability when it comes to financial strains in the future.

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