Don’t forget your future while paying for your present
Bankrate: 22% of Americans had not contributed to a retirement account in the last 12 months.
(InvestigateTV) — Fidelity advises consumers who carry debt with a 6% interest rate or higher to pay it down before investing additional money towards retirement, but cautions that this approach may not be right for everyone.
Debt relief attorney Leslie Tayne said she frequently gets asked how to balance debt repayment with retirement savings. She really believes there’s a balance between the two.
“Depending on the type of debt you have, some debt can’t be paid down quickly,” Tayne noted. “Large student loans are difficult to pay down quickly, mortgage debt, but the day-to-day debt, in terms of credit card debt is generally high interest debt that you want to try to tackle.”
At the same time, she said look at long-term savings goals. Right now, interest rates are high, making it a great opportunity to put money away and earn more from it. She urged people to find the balance for their budget.
“If you just put all your money away and you don’t pay off your debt, you’re going to end up with more debt. And it’s difficult to pay that off using your cash,” she said. “So, balance it, look at the opportunities offered by your employer. If there’s a matching program, you definitely want to take advantage of matching programs and contributing to that.”
She said balancing a budget and looking at debt should happen monthly if not weekly, and urged people to stay on top of where their money is going.
There really is no “one way” that’s right or wrong about this, but Tayne emphasized that saving for retirement is important and shouldn’t be put off. It deserves the same weight as paying down debt.
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