Stop Saving If You Have Debt!
Monday, 11 August 2008 01:10
People are funny. We don't always do what's best for us instead we do what feels best and try to suppress any reasons why it may not be the best thing to do. Perhaps that's why there are so many people that have both savings and debts.
It's Simple Psychology.
It just feels better to save. In saving you feel like you are laying a foundation for the future, whereas on the other hand paying off debt almost feels like throwing your money away. You're saving that money for improving your house, or for the kids' education, or suchlike, in an account with a decent rate of interest. What could possibly be wrong with that? Plenty, if you have debts.
Don't Be Foolish.
There are pretty much no savings accounts that will offer interest rates as high as what the credit card companies charge.
Here's an example:
Say have $10,000 in a savings account at 5% per year
$5,000 on a credit card at an interest rate of 20% per year
How much money do you boast?
After as little as five years, the answer is effectively $0 - your debt will have grown to around $12,000, the same total that your savings are now worth.
It's difficult to accept as true right now, but it really is much healthier to pay off your debt. If you used half your savings to pay off that debt, you'd be in such a better place. You avoid five years of interest on the debt, but you still get to keep that $5,000 in your savings account, earning interest and after five years, that's about $6,180.
If you'd still prefer to keep your savings intact rather than using them to pay off your debts, ask yourself this basic question: is your pride worth $6,380 of your family's money?
Think of Your Financial Future.
When you have money enough to pay off your debt, there's entirely no reason to keep it. Debt is for people who don't have the money, and need to borrow it. Debt costs money, and savings make money - you want as much of your finances as achievable to be savings, not debts.
If your savings account and credit card are from the same bank, then you're in effect paying for the opportunity to borrow your own money from them. How ridiculous does that sound?
By paying off your debt with savings you'll also be less stressed about your debts, and your credit report score will rise - getting you a much better interest rate if you ever need to go into debt again.
It can be tough. You just have to keep in mind that any money you've 'saved' hasn't in reality been saved at all. It's money you should have been spending instead of making purchases with a credit card.
Of course, it feels bad to spend money thinking that you're spending away your future - but always bear in mind that when you use a credit card to spend that same money, you're spending away your future, plus interest. As it goes, if you've got the debt, then those savings have already been spent.
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About the Author
Get more help and advice on Debt, Credit Cards, Mortgages, Investing, Real Estate, etc. From http://www.1stfinanceguide.com.
Last Updated on Thursday, 10 December 2009 14:10
Why You Shouldn't Save When You Have Debt
Monday, 11 August 2008 00:42
Humans are funny creatures. We don't always do what's best for us - instead, we do what feels best, and try to blank out any reasons why it might not be the best thing to do. Maybe that's why there are so many people who have both savings and debts.
It's a Matter of Psychology.
Yes, it feels better to save. Saving feels like building a foundation for your future, while paying off debt feels like throwing your money down a hole. That money is for the kids' education, or for improving your house, or whatever else - and it's in an account earning a good rate of interest. What could be wrong with that? Lots, if you have debts.
Don't Be Fooled.
There are almost no savings accounts that offer interest rates as high as the ones credit cards charge. Here's a question: if you have $10,000 in a savings account earning 5% per year and $5,000 on a credit card at an interest rate of 20% per year, how much money do you have? After just five years, the answer is effectively $0 - your debt would have grown to around $12,500, the same amount that your savings are now worth.
You might not believe it now, but it really is much better to pay off your debt. If you used half your savings to pay off that debt, you'd be in such a better position that it's really amazing. You avoid five years of compound interest on the debt, but you still get to keep $5,000 in your savings account, earning interest - after five years, that's about $6,380.
If you'd still rather keep your savings intact instead of using them to pay off your debts, ask yourself this simple question: is your pride worth $6,380 of your family's money?
Think of Your Financial Health.
When you have enough money to pay off your debt, there's absolutely no reason to keep it. Debt is for people who don't have the money, and need to borrow it. Debt costs money, and savings make money - you want as much of your finances as possible to be savings, not debts. If your savings account and credit card are with the same bank, then you're effectively paying for the privilege of borrowing your own money from them. Why would you do that?
There are other benefits to paying off your debt with savings. You'll be less stressed about your debts, and your credit report will show that you were able to pay everything back - getting you a much better interest rate if you ever need to go into debt again.
I know it can be hard. You just have to remember that any money you've 'saved' hasn't really been saved at all. It is money you should have been spending instead of making purchases with a credit card. Yes, it feels much worse to spend money thinking that you're spending away your future - but always remember that when you use a credit card to spend that same money, you're spending away your future, plus interest. Anyway, if you've got the debt, then those savings have already been spent - stop denying it to yourself.
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About the Author
Gregg Hall is a business consultant and author for many online and offline businesses and lives in Navarre Florida. For more on this and other debt elimination strategies go to http://www.dtsfinancialgroup.com
Last Updated on Thursday, 10 December 2009 14:11
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United States Savings Bonds - How Do I Calculate US Savings Bond Values?
Sunday, 10 August 2008 23:15
A savings bond is a treasury security for investors. In essence, investors are loaning the government money. They are issued both as paper bonds and electronic savings bonds. They cannot be traded but can be redeemed after only one year. There are no dividends, per se, with a savings bond, as the interest payments are simply added on to the value of the bond, but as tax-deferred items, the interest doesn't have to be reported to the government until the bonds are cashed.
The value of a savings bond varies with the kind of bond purchased - series A, B, C, D, E, EE, F, G, H, HH, I, J and K. It also depends on when it is cashed and what kind of interest it has been assigned. Since 1935, the treasury has issued savings bonds in alphabetical progression. For example, series A bonds were offered the first year, Series B bonds followed in 1936, Series C ran from 1937-1938, and Series D were issued from 1939-1941. Series E bonds, longest running of the treasury savings bonds, ran from May 1941 until they were discontinued in 1980.
Series EE bonds were brought out in 1980 to replace the series E. They can be purchased at half or full face value. They come in amounts between $50-$10,000, and carry a maturity date of between eight to thirty years. Those cashed in before the fifth year are penalized three months' worth of interest.
If EE bonds are purchased through a bank or other financial institution, it is also known as a Patriot Bond. There were more kinds of savings bonds, including the series F and G (which were offered to all investors except banks), series H, HH, Series I, J and K.
How do we calculate the value?
The value of a savings bond can be calculated by taking note of the face value of the bond, the interest rate from the time the bond was issued until the present time, and whether there are any penalties that have to be deducted. In addition, it is important to note that a bond that is issued at half the face value will be worth the face value at maturity, while a bond that is issued at face value is worth twice this amount at the time of maturity. Savings Bonds can also increase in value if they are redeemed past their maturity date, in which case the interest must be calculated on a year-to-year basis.
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About the Author
On http://www.bond-trading.org/ you will find articles on insured municipal bond investments and canada savings bonds.
Last Updated on Thursday, 10 December 2009 14:13
Canada Savings Bonds - Learn All About The Canada Savings Bond
Thursday, 07 August 2008 09:30
The Canada savings bond is offered by the government of Canada to investors from early October through April 1. These bonds were introduced in 1946 under the name "Victory Bonds" to serve as a viable and secure option for investors who wanted more security than mutual funds or stocks could offer. Before this time, however, Canada had trading instruments that were similar to Savings Bonds, such as the Canada Fourth Victory Loan of 1943 and the Canada-Dominion War Savings Certificate, issued in 1944.
What are the different types of CSBs?
1) The Canada Retirement Savings Plan (RSP): This is a no cost RRSP (registered retirement savings plan) implemented for carrying Canada Premium and Canada Savings Bonds.
2) The Canada Premium Bond: This provides a fixed rate of return in regular and compound interest.
3) The Canada Retirement Income Fund (RIF): This is no cost fund implemented for carrying the Canada Premium and Canada Savings Bond.
The Canada Savings Bond and the Canada Premium Bond are very similar; however the Savings Bond can be cashed at any time of the year, while the Premium is cashable only one time a year. Either bond can be purchased with a registered retirement savings or a retirement income fund. Premium bonds will always have a higher interest rate than those of Savings bonds sold at the same time. They can be purchased in compound interest form or simple interest form, and one kind can be exchanged for the other at any time.
Why are the Canada Savings Bonds popular?
One reason that Canada Savings Bonds are popular is the security they offer to investors. Since they are backed by the government, they make an excellent addition to the secure portion of any portfolio. In addition, Canada Savings Bonds have a guaranteed interest rate: they can increase along market lines, but never fall below a stated percentage for each investment period. They are an affordable option for almost everyone, with prices as low as $100.
Who is eligible to purchase these and where can these be bought?
The Canada Saving Bond, which is available only to Canada residents, can be purchased on-line, on the phone, in person at a bank or from an investment broker during its six-month enrollment period. It can even be acquired through a direct payroll deduction, making them accessible to just about everyone in the country. And, there is no brokerage fees involved in purchasing a Canada Savings Bond. With millions of Canadian investors purchasing bonds every year, the security of these bonds will continue to strengthen portfolios of investors around the country.
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About the Author
On http://www.bond-trading.org/ you will find articles on insured municipal bond investments and canada savings bonds.
Last Updated on Thursday, 10 December 2009 14:15
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Savings and Debts
