We all like to have a few dollars behind us in the bank and a little pot to dip into should you get into difficulties. Well in fairness I am inclined to agree, I like having an emergency fund but adding to that fund each month rather than putting it towards your debt is costing you money.
And here is why, it is simple math but so many people overlook the simple calculations and it just makes the lenders a lot richer than they already are.
If you are in the lovely position of putting $150 a month into a nice savings account after 5 years based on an average of 5% interest you will have the handsome sum of $10,200 in that savings account. So for the sake of $37.50 a week you could be much better off!
Now lets turn it around where you are using your credit card to top up that $150 a month, based on 18% (which is in fact daylight robbery but they still charge it) after 5 years you would have totaled up close to $14,400. That is an extra $4,200 for your overall debt!
So since we have spoken about a number of different ways to save an extra few bucks here and there does it not make sense to put this money towards getting rid of your debt, instead of saving for that rainy day?
