Pay Down Debts First to Get the Most Out of Savings
Forget iPhones, jewelry and designer jeans - the latest trendy accessory this fall is a purse with tight strings.
Yes, the nation with a negative savings rate has finally gone frugal. According to a poll taken this spring, 32 percent of the country believes spending less has become a permanent way of life.
We're increasingly growing our own food, opting for carpooling and public transit over our own gas-guzzling cars and choosing thrift store finds over designer duds. We're switching generic for name-brand. We're giving up the little luxuries that come with not-so-little price tags. In short, we're learning to spend within our means.
So with all this newfound savings enlightenment, you'd think that we'd be through with our money troubles. But unfortunately, it's more complicated than that thanks to credit.
Yes, cutting costs is essential for making ends meet - especially when you consider that, until recently, most of us were spending far more than we earned. But the biggest reason folks have trouble paying the bills isn't that they're spending too much. It's that they're carrying too much debt.
If you can save money by buying generic brands, carpooling to work, etc. that's great. But no matter how much you scrimp and save, money will always be a struggle until you get rid of your debt burden. When you pay just the minimum each month, you're barely covering interest - meaning your debt isn't going to budge (and if you continue using credit, it will actually grow).
If you can manage, use your newfound thriftiness to your advantage. Forget about the minimum payment and use your savings to pay down as much of your balance each month as possible. The average American can save thousands of dollars in the long run by reducing interest today.
Of course, many folks choose to avoid their debt for fear it's impossible to handle. But it's not your job to handle debt - that's where bankruptcy comes in. Bankruptcy is your right as a U.S. citizen. As soon as you file, you are legally protected against creditor actions while you eliminate debt through an affordable bankruptcy plan. At DebtStoppers, we can identify a bankruptcy plan that is suited to your specific financial situation.
Want to find out more? Just sign up for a no-cost personal debt analysis with one of our Chicago bankruptcy lawyers. Don't just spend less, spend smarter with bankruptcy.