Reduce Debt Or Save

• Budgeting
• Insurance
• Debt Reduction
  • Reduce Debt Or Save
  • Reducing The Mortgage
  • Credit Cards
  • Student Loans
  • Consumer Debt Reduction
• Savings
• Before You Invest
• Investments
• Retirement Planning
• Estate Planning

Calculators

• KiwiSaver Account Calculator for Employees
• Residential Property Investment Calculator

Useful Resources

• KiwiSaver Tools and Information
• Follow the Secrets to Wealth
• Get the newsletter direct to your inbox each month
• Independent life insurance information

• Introduction
• A simple example
• The debt reduction vs savings calculator
• The exception to the rule

Introduction

Many people reach a stage in which they either have some money left over each week or receive a lump sum with which they can begin to save.

However, they may also be repaying debt. The question often asked by those in such a situation is, whether they should use the money now earmarked for savings to pay off their debt faster.

In most instances, particularly in these days of low inflation, the answer is almost universally "yes, it is beneficial to pay off the debt first". Whether it's repaying the mortgage or paying off a car loan, the money you save in interest costs will, in most cases, be higher than any gains you make through your investments. Repaying debt is also, in effect, a risk-free investment - and there aren't too many of those out there.