It’s really easy to rack up debt, in fact way too easy these days with every institution throwing you fantastic deals in front of you to encourage you to spend. ‘Free’ bank transfers on new credit cards, ‘free’ overdraft with your student bank account. Open a store account and get 10% off all your purchases today. Even the government encouraged us when they dropped and when they increased the VAT rate again the retailers crowed about ‘savings’ as they kept products at 15% longer instead of higher 20% (and ‘paid it for you’ to encourage the public to spend.
Saving is somewhat harder isn’t it? What do you do with your piggy bank where you throw in all your coinage. Do you take it down to the bank and cash it in or dive into the piggy when you need a bit of change?
The simple view:
The loser here is obviously debt. So pay off all your debt first before starting to save. Saving interest rates are never higher than debt interest rates.
The realistic view:
There are different types of debt. Some are more expensive than others. Here’s my checklist for starters:
- Always pay off credit card debt first
- Never get a loan from a shark
- Make the effort to start pay off your student loan when you get your first job post uni
- Never get an overdraft (it will form a bad habit)
The complex view:
You can leverage debt to earn more quillions. We’ll cover this later, much later.