If you really want a lasting debt freedom, the best way to achieve that is by combining your chosen debt relief program with saving. Choosing between the two is not really an option. Both are equally important to take care of immediately.
We don’t have to go into details when it comes to debt payments. The bottom line is, if you refuse to pay off your debts immediately, your debts will grow because of the interest rates and other penalties that will be imposed on you. This is probably why people are opting to prioritize this over their savings.
Well that is where they are wrong. In order for them to solidify their quest for debt freedom, they need to combine savings with any debt relief effort that they will use. The thing about saving is it will keep you from incurring more debts.
Here’s how it works. When you are in a debt relief program, the chances of you putting all your extra money into your debt payment is very likely. You only use your income for the basic necessities so you can maximize your contributions towards your debt.
But what if something happens that requires immediate financing? It can be the car suddenly breaking down or it can be a busted AC. It can also come in form of a health issue. Where will you get your funds? Since your expenses are down to the bare necessity, you may have to use the money set aside for your debt payments. But if you have your savings, you don’t have to sacrifice any of your usual expenses. You only have to dip into your savings, pay off the immediate expense and work on replacing what you got in your own time. You don’t even have to put yourself further in debt anymore.
Another situation wherein your savings will come in handy is when your main source of income is suddenly gone. It can be due to job loss or you are not well enough to keep on working. Your savings can help provide for your family and debt payments for the next few months as you go and look for another source of income.
Of course, the importance of saving is easy to understand - it is the actual “saving” that is hard to do. If you are in debt, the chances that you are living on a limited income is very high. The technique to having enough to send towards debt payments and save at the same time is to choose debt relief option that will free some of your limited funds. Debt consolidation loans, debt management, debt settlement, balance transfer - any of these will help you achieve this.
You can also combine it with a frugal budget. You may be hesitant because of the harsh restrictions but it is only until you have grown your savings. Once you have enough on your reserve fund, then you can loosen your budget.
Earning more is also an option. There are many legitimate work at home opportunities that you can use to achieve this. Get a second source of income that will not burn your out. That way, you have more to allot for your savings and even a little extra for your entertainment needs.