Make a Decision

Getting your personal finances in order can be very challenging  because with resources often providing conflicting, it’s hard to feel completely confident that you are making the best decision with your money.

Personally I am still thinking a lot about the never ending debate of paying down my debt or save for the future to help avoid future debt.

I want to save around $6000 in 11 months, but I keep thinking that with that money my debt would be massively slashed.

Conventional wisdom argues that if the debt interest is higher than the interest you would get from savings, you should always put the money towards the debt. This is much more obvious when it comes to very high interest debt, such as a credit cards, pay day loans, line of credits, etc. It becomes less obvious when you have ‘better debt’ like a student loan, low to no interest loan or a mortgage.

Is it worth it for me to save an additional $6000 so I don’t put that all back on my debt, or should I use that money to pay down my debt now, meanwhile decreasing the amount of interest I pay daily, so I actually can accelerate repayment and put that $6000 back on the debt if I had to? (The fact that the second option sounds questionable even to me I think is my answer.)

The point I am trying to make is that often in personal finance there are very obvious tips:

  • make a budget
  • live within your means
  • reduce and eliminate high interest debt.

There still are lots of grey areas however, when two or more options each have their advantages and disadvantages. In these situations, you just have to pick an option and stick with it. Check in on yourself after a month, 3 months, 6 months, 1 year to see if it is still working for you and you are still working towards your goals. Notice that I did not say daily or weekly. Financial goals can take time and being hyper vigilant can only lead to lots of worry and anxiety.

Feel free to seek input from friends and family around your goals, but keep in mind that what works for them might not work for you (it might not even be working for them).

In financial grey zones, trust yourself to simply make the decision.

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