Debt and Savings: Pay it Off or Save it Up?

These days, there are seemingly endless ways to do just about everything, and personal money management is no different. Furthermore, individuals from North Dakota to South Central states have their own budgeting methods and ideas about saving money. 

One thing that seems to weigh heavily on several people’s minds, though, is the prioritization of expenses and savings. Some individuals rely on payday loans to cover debts and pay for upcoming dues, while a select few refuse to have debt of any kind. Overall, the fact of the matter is that many people in North Dakota and throughout the states are paying off some sort of debt or loan(s). 

This brings about an important question: should people build up their savings first, or should they pay off their debts first? Almost certainly, many people would argue that it is best to pay off all debts first and foremost, but there are some things that everyone should consider before answering this question. 

No ifs ands or buts – individuals that live in North Dakota need to have an emergency savings account for unexpected mishaps. Before even thinking about paying off debts or saving up for a dream vacation, people must make sure they have sufficient funds in a separate emergency account. Disaster can strike at any moment; therefore, it’s better to be safe than sorry.

While living a debt-free life is ideal, the majority of people have at least some debt. For those in North Dakota who are paying off loans with high interest rates (seven percent or higher), it is recommended that they focus on putting money towards these expenses. Forbes notes that consumers are more likely to save more in interest by paying down debt. It is perfectly fine to use payday loans to decrease debt quicker, so long as you have prompt repayment means. 

As for loans with lower interest rates, such as five percent or lower, it is better to invest more money in savings. On the other hand, debts with lower interest rates are oftentimes easier to pay off, because they cost less. In this case, it ultimately depends on the individual. Payday loans are a viable option to cover smaller debts. 

Saving up as much as possible is never a bad idea – especially for emergencies. However, using payday loans to cover debts is a great option for those who are able to repay borrowed amounts quickly. At the end of the day, the debt versus savings battle is one that needs to be fought by consumers themselves. The key to success, if there is one, is preference. 

Aubrey Andersen-Bakker is a finance writer reporter for Fusion 360, an SEO and content marketing agency. Information provided by Quik Check Financial.