Should You Pay Off Debt with Savings

pay off debt with savings

There are still endless arguments from financial experts to people whether you must pay off your debts first before saving or vice versa.

Indeed, your savings serves to be an emergency fund for unexpected expenses. It’s the backbone of your personal financial framework for your future. In addition, it’s essential to provide for your family’s growing needs.

Meanwhile, if you carry big debts under your name whether it’s credit card, personal loan, etc. it’s a smart step to pay it off with your cash reserved to save you from the debt cycle. Please be reminded that you must avoid using your retirement savings to do it.

As we all know, a debt-free life comes with great benefits.

Here are some perks that you could have when you pay off your debts with savings

Stop Interest Payments

Credit card interest rates are the main reason why you’re still in the debt cycle. Undoubtedly, credit card companies charge a higher rate than you could possibly imagine plus the hidden charges you’ve overlooked when you signed the contract. This interest rate, if compounded monthly or annually, can put you in debt hole in the future.

By paying debts out of your savings, you will stop interest payments, hence, it will make you closer to financial freedom and will enable you to save more money in the long run.

High FICO Score

Payment history makes up 35% of the FICO Score. In fact, individuals with high FICO score use only 7% of their credit limit and have no late payments in their credit reports.

Further, FICO score is determined by your credit utilization ratio meaning your balances as a percentage of your available credit.

It’s pretty obvious that with high FICO score you’ll get loans with low-interest rates and favorable terms. Luckily, using your savings to pay off could uplift your FICO score quickly. A couple of months that you’re debt-free, your score can double up or increase higher than you could ever imagine.
Emotional and Mental Benefits Thinking about how you’ll be able to pay your big debts may cause stress and affect your health.

On the other hand, when you’ve paid all your debts, you will notice that there are some emotional and mental benefits that come with it. As they say, a debt-free life is a worry-free life. Here are some benefits to name a few:

• Better Spending Habits
• Better Purchasing Power
• Communicate Better
• Quality Time with Family and Friends
• Prioritize Wisely
• Limitless Options for investments and Savings
• A Sense of Financial well-being and Importance

Solving your Tax Problems

Aside from debts, one factor that severely affects your financial situation is taxation. Millions of Americans got some issues with the IRS regarding their income taxes. If not taken seriously, these problems lead to levy on their assets and garnishment of their monthly wages. Fortunately, you can seek professional help in fixing your tax issues with the IRS. The guidance of these tax experts will put you on the right track on the latest IRS protocols and provisions that save a lot of your hard-earned cash.

Towards a Bright Financial Future

Paying your debts with your savings is a good start for a bright financial future. Consequently, it’ll let you save more money and build your emergency funds once again, but, this time, around, it’ll grow into a larger one because you don’t have to worry about your indebtedness.

Now that you’re debt-free you will most likely to qualify into some financing with low-interest rates. It will make it easier for you to purchase a new home or a new car. How cool is that?

Financial success depends upon discipline and willpower. If you’ll stick to your goal of a debt-free life, then you can achieve it. It’s just a matter of positive mindset that you can conquer all your financial obstacles. Relatively, there’s a way that you can speed it up and become free of debt soon enough.

What’s this process?

Debt Settlement programs from Financial Rescue LLC will let you save money and pay your debts all at the same time.

How? By enrolling in a top notch debt settlement program from Financial Rescue LLC, you will have a one monthly payment scheme that will surely fit your financial capacity and situation. Further, through a debt settlement program, many clients testified that they’ve reduced their total debt amount up to 40 to 60%. Thus, these programs helped them allot your savings to build an emergency fund or pay off their other debts.

In a deeper sense, debt settlement programs are the better solutions to the debate on whether to save first or pay off your debt first because you can do both without having the burden of cutting off your budget that for your other needs.

Call us now at 1-877-97-33287 to learn more about these programs. Our certified debt consultants give a no-cost, no obligation consultation to those who want to conquer all their unsecured debts.