Michael Newman’s latest ‘e-Wealth Daily’ article is titled “The True Expense of Your Debt”. [‘e-Wealth Daily’ Article]


Michael Newman’s latest ‘e-Wealth Daily’ article:

The True Expense of Your Debt

Whenever I talk about personal money management, I really try to emphasize the importance of saving. There’s no question you’re going to need money in the future, and it’s likely going to be more than you need now. I usually like to tell people to save at least 10% of their earnings; and 10% is the bare minimum. Aiming for more is ideal, if possible.

However, there are some rare instances where having money sitting in a savings or investment account doesn’t make the most sense. Especially if you’re in considerable debt.

For example, let’s say you’ve got $5,000 to $8,000 sitting in a savings or investment account. If you do, that’s great. That’s a nice chunk of money that can help you in the future — especially if it’s invested wisely. However, if you have that money available and are sitting in a hole of debt of any size, you may want to think about putting your money towards filling the hole. After all, the more debt you have, the faster it grows.

As you likely know, debt can get quite expensive. For example, if you’re carrying around $5,000 worth of credit card debt, you’re probably accumulating 20% worth of interest fees every month. That 20% adds up with lightning speed, and before you know it, debt recovery may seem even more impossible.

So, let’s say you’re making 10% on your investment. If your money is sitting in a savings account, you’re making anywhere from 0.25% to 3.0%. No matter how you look at it, you’re making money at a much slower rate than you’re falling into debt. Because of the fact that you’re essentially spending 20% to make, at most, 10%, it doesn’t really make sense to keep your money in the investment account if it could reduce — or even eliminate — your current debt.

I know it feels good to have that money sitting away for your future or a rainy day, but the truth is that, depending on your debt, it could be delaying your chance for financial freedom. Clear up your debt, then start saving. Not only will you have the relief of being debt free — or at least in less debt – but you’ll also be able to maximize your savings.

e-Wealth Daily

About e-Wealth Daily

The e-Wealth Daily Bulletin brings you daily tips, advice and breaking news related to home businesses, small businesses and internet marketing. Our team of experts gives you the information you need to take your business pursuits to the most profitable level. Founded by Adrian Newman in 2003, the e-Wealth Daily Bulletin and www.ewealthdaily.com are a division of Lombardi Publishing with online newsletters reaching over 100,000 subscribers each month.

* IMNewsWatch would like to thank e-Wealth Daily for granting permission to reprint this article.

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