To Get Rid of Credit Card Debt
Few things can damper your mood to save money like credit card debt. It may be a good idea to stop saving and get rid of that pesky interest first, otherwise, your golden years’ income will be spent catching up.
Let’s look at an example. If your retirement accounts are earring between 5% and 10% while your interest rate on your credit cards are sitting at 15% or 20%, all the money you’ve earned will virtually disappear before your eyes. But by the time you retire, you may not be able to work to maintain your lifestyle, so you’ll have to budget heavily or rely on family to help you out.
In this case, it’s better to pause your contributions as long as you’ll tackle your debt seriously. There are a few methods you can use, such as the snowball method which tackles the smallest interest first, or the avalanche method which tackles the debt with the highest interest first.
Times of Unemployment
As we have all experienced recently, times of unemployment may be right around the corner and we wouldn’t even know it until they’re upon us. Should you continue saving for retirement?
Ideally, one spouse’s income should be enough to cover both everyday expenses and retirement contributions- but we don’t live in an ideal world, do we? And what about those who are single?
It is OK to stop saving during these hard times until you’re in the clear, especially if you’d be going into debt otherwise!
