You need a budget for a lot of reasons. I don’t have time to go into all of them. But if you’ve been hanging around for awhile, you are probably starting to understand a thing or two about priorities and the importance of having a budget.
The budget can also help you answer very important questions like, “Should I save more or pay off my debt?” And that’s what I’ll talk about today.
Frankly, there are a lot of ways to answer this question, and everyone’s circumstances are a little bit different, but it is very important, in every situation, that you not go backward.
In order to do that, you need to get a handle on reality—what are you currently spending—and be sure you are looking ahead, and planning for larger, less frequent expenses. If you do these things well, it will go a long way toward keeping you out of additional debt.
If paying off debt is your priority, I love that. I support that. But do not underestimate your true expenses. Planning (and saving for) car repairs, and insurance premiums, and doctor visits, and kid activities, isn’t optional. These are your true expenses. You know you will have to pay for these things at some point in the future, and by putting money aside, little by little, every month, you are preventing yourself from getting in trouble down the road. Don’t go into more debt while you are trying to pay off your debt, because, just no.
In all things, you need to consider your past self, your current self and your future self. Here’s why:
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