One of the biggest challenges for people facing high debt loads is deciding whether to aggressively pay down debt or save some money to avoid needing another loan in the future. Connecticut individuals facing this debt management dilemma should consider many factors when deciding whether to save or pay down debt. Steps can include reviewing their cash flow, clarifying access to lower interest credit and reviewing household budgets.
An emergency fund is a priority for many Americans, especially those with uncertain income. Uncertainty can take many forms, but generally freelancers and startup workers are in a more vulnerable position than long-term employees and should save accordingly. It is a good idea to have three to six months worth of expenses available in case an emergency arises.
Having an emergency fund is even important for those with sizable debt. This is particularly true for individuals who do not have access to a lower interest loan. Should an emergency take place, these people could end up paying high interest and struggling through even more debt without some savings.
There are other considerations people should make when choosing between saving money and paying down debt. Some questions are personal, such as how comfortable the individual is with holding debt and how little he or she can live on if income is interrupted. Others are questions for lenders, such as those related to credit access and interest rates. Those facing serious debt management issues may also want to speak with a Connecticut lawyer about their options from a legal perspective, such as the possibility of bankruptcy if debt loads are too high.
