Money left, which is better: save it or pay off debts?
The end of the month has come and that little money is left. Maybe you have some debt, but you’re also considering saving, right? Spend it all, you already know, not even think. Today we will help you make this analysis and make the best decision for your pocket.
To begin with let’s understand the two sides of the coin. There are two situations that need to be looked at when you have extra money at hand:
1. If you have debts: the interest they accrue is generally higher than the income you would have if you invested the extra money somewhere. Do not get in trouble!
2. If you do not have debts: which investments have good prospects? What are your goals? Get off the edge and become a saver!
With debts, who benefits the creditor
Those who have debts know that the reality of the market tends to be unfavorable to this group of people, since the interest charged may be higher than the income of the investments in the domestic market. That way, whoever is profiting from the situation is your creditor.
Once an extra buck gets into your account, it is advisable to have your debt paid in full, or as much of it as possible, without breaking the budget. An interesting solution is when your debts are up to date, that you pay the last installments, reverting the interest of that period in discount.
Planning to prioritize priorities
Plan your budget and list your debts by value. Give priority to the most expensive ones, which have the highest interest rates, such as:
– credit cards, 10% per month;
– special check, 8% per month;
– personal credit, 4% per month;
– Vehicle financing, 2% per month.
It is worth remembering that these rates are only illustrative and vary according to the financial institution.
Also analyze your current employment situation if you are stable, confident that the company in which you work remains strong in the market, as well as your ability to grow with it. And then, you may be able to stabilize, maybe get raised and regularize your outstanding balance. From there, with the calmer financial situation, you have more opportunities to invest more and better.
Are your debts up to date? Try investing
It is necessary to analyze the market conditions for investments. How is the behavior of the area in which you intend to invest and the growth trends or of the sector. Assess whether an investment will affect the settlement of portions of your debt.
To start applying your money, form a “financial security mattress” – a cash reserve that will suffice for periods of crisis, which should have quick and easy access to emergency cases. The old savings is still a good call.
With some debts in your life, it is important to stay calm and plan all your next steps. With caution and following your new day-to-day financial strategy, you can go out of the net and resume your routine, with more investments and according to your possibilities.
After that analysis, begin to organize your financial life. Create goals and strategies to dodge the urge to use your money. Understand that with discipline and organization, you will be more likely to increase your assets and your family.