#4 Don't save if you have debts

by Jane Baker on 08 June 2009  |  1 comment
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Today’s words of ‘what not to do’ advice are for anyone who’s trying hard to get their finances in better shape.

Today's words of 'what not to do' advice are for anyone who's trying hard to get their finances in better shape.

#4 Don't save if you have debts

It's a simple rule: If you're charged a higher rate of interest on your debts than you're earning on your savings, then number crunchers will tell you to get out of the red sharpish.

After all, it's a no brainer if the return from your savings is being wiped out many times over. This, quite clearly, makes even more sense now that savings rates are at an all-time low.

Of course, there are exceptions to every rule. For one thing, it's always a good idea to have a cash cushion so you'll be able to weather the storm if an emergency strikes. And in today's turbulent economic climate, there's a lot to be said for that.

But once you've put a little aside, I recommend you throw as much money at your debts as you can, even if it means sacrificing your savings.  

And, better still, make your repayments stretch even further by snapping up interest-free deals wherever you find them.

You never know, by the time you're debt-free and you're thinking about saving again, rates may even have recovered.