What’s Left Over: Should You Save Money or Pay Off Debt?
As the recession continues to deepen, what should you be doing with your discretionary money at the end of the month, after your basic living expenses are paid? Conventional advice has, in the past, touted the benefits of paying off high-interest debts as quickly as possible, then dividing your money to pay off debts and set some aside for savings. But in today’s economic slump, there are certain scenarios in which you may want to consider a different approach.
If there’s a chance you could lose your job …
Let’s face it, there probably aren’t many jobs that are 100% secure in this economy. If you have reason to believe you’re likely to get laid off, the best thing you can do for yourself is pay off debts. When you’re laid off, your income will be reduced to the amount of unemployment benefits you’re eligible for, and chances are you won’t have access to additional credit. Paying off as much debt as possible before you’re laid off will increase your available credit line in the event you need to access more money than you receive through unemployment benefits.
