Is this a good financial strategy?
The key to financial power lies in your credit rating. If you plan to get a home loan, save money and get better credit starting now!
Im 24 years old. Ive saved a good amount of money but I also have some debt. I have apx 50k in debt (all my car and student loans, NO credit cards). Ive knocked this down from 65k.
I have apx. 20k in assets. I have about 7.5k in what I call an emergency account, and 3k in a small funds account. I also have a well funded 401k.
Whats my next step? Any extra money I have should i try to knock down my debt, start investing in stocks, or both?
Is this a good financial strategy?Without a complete financial picture (do you own a house?), it's a bit more difficult, but here's what I suggest:
First, make a spending plan (if you don't already have one). Start with necessities (rent/mortgage, food, utilities, transportation - auto loan, gas, insurance). After this, budget some for nice-ities (movies out, CDs, books, every week or two). The rest will go to debt reduction.
Now, list your creditors, balances, and interest rates in order from smallest balance to largest (unless you have one very high interest rate, then it will go at the top of the list). This is the order you'll pay off the debts. Pay as much as you can on the first debt, and the minimum on all the others. When debt #1 is paid off, move that money to debt #2, continuing to make minimum payments on the others. The total of your debt payments will remain the same each month until all your debts are paid off.
Since you have more than enough in emergency funding, you need to determine where that money is better suited. For example, if your emergency fund is earning 1 or 2% in a bank savings account and you're paying 15-25% on your highest rate debt, liquidate all but $1000 of the emergency fund and put it on the debts.
More Related Questions and Answers ...
The loan information post by website user , we not guarantee correctness.