Is it better to save $$ or pay down debt?
Is it better to pay down debt or add to your savings account??
It’s the financial version of the chicken or the egg - which came first?
The short answer→ it depends.
Both are good AND important.
What are your goals and what’s your timeline?
Assuming one of your goals is home ownership, here are a few things to consider…
#1 - Depending on your debt (i.e. credit cards vs. student loans, etc) paying down credit cards to 30% or less of the limit can drastically improve a credit score. We're always talking about ways to raise your credit score!
#2 - At the same time, you’ll need some cash on hand for a down payment/minor repairs/cash on hand.
#3 - Rarely do you need 20% down, (We can even get down payments as low as 3% for conventional loans & 0% down for VA or USDA customers). It’s still good to have some cash ready.
#4 - Not to mention, with everything going on in the world today, having some cash on hand & being easily accessible is never a bad idea.
We’re not talking about stuffing it under your mattress either. ;)
BEST ANSWER:
Talk to us, YOUR awesome mortgage lenders (bet you didn’t see that coming ). We’ll help you look at your specific situation - including your budget and your goals - to help you determine a course of action.
Whether your coins are going towards bulking up your savings account or knocking down debt - you’ve got to get it from somewhere.
Managing your budget is something everyone says you "should" do, but no one says it's easy to do. Especially if you've never done it before.
So, looking for the next best step (or the first step)? We’re here to help!
Small steps add up - so just start somewhere. That's easier said than done so here are a couple of ideas
[BTW - Did you know Charlie was a financial advisor before he was a mortgage lender? And Emily spent years helping people be confident with their budgets and finances before she focused on helping people become homeowners. Our team LOVES looking at all things finance!]
1 - 10% of your after-tax income is a great savings goal.
But if that doesn't work right now try for 5%. Even if it's $50/month...something is better than nothing!
2 - Set and forget!
Create an automatic transfer from your checking account to your savings account. This ways it's done for you and you don't have to remember it each month.
3 - Do a subscription audit.
Are there things you're no longer using? Cancel them. Take it a step further by adding that payment to your savings account ;).
4 - Do a spending audit.
Is there a place to cut back on - even for a short period of time?
5 - Set up a mortgage review.
Yes - your mortgage is a big chunk of your budget, but also your mortgage is a TOOL to help you be financially confident. Maybe it's time to consolidate debt. Maybe it's time to drop PMI. We don't know until we look - so reach out to schedule a time to review.
Start somewhere - start small! We're here to help!
Give us a call or send an email and together we’ll determine the best course of action for you and your goals.