But I am struggling with whether to pay off debt and work on improving my credit score or sock the money into savings and sit on it. I think I would feel better if I paid off my debts but I need to save money as well.
Not sure of the full history……. As far as I understand credit is based on a judgement over time. So paying something that has been reported as slow pay lets say might not jump hsi credit score because it finally got paid off.
But paying on time consistently and reducing your balances to half your credit limit and eventually wiping it out helps.
To save or not to save. Think of your end goal… do you want money in the bank that you had to work very hard for or do you want to continue to throw away your money on interest charges.. month after month after month..
If you cant earn more on savings then you are paying in interest are you really saving.?
I vote for debt pay-off once everything else is gone you will LOTS of money that you have just freed to save aand grow at a much quicker rate then you will be able to whilke trying to re-pay debt.
Couldnt hurt to start some kind of plan that is automatic, but start real small and increase it as you start freeing up cash as your debt payments go down.
Thats my 2 cents…. hope it helps. There are alot of people that struggle in managing money because its kind of learn as you go unfortunately… To the question at the end of your email, if he takes care of the small debts on his credit report, it will improve his score. It might just take a little time to come off, I’m thinking about 2years.
The most important thing to start paying off debt is having a budget and knowing what you have coming and going out…Most people don’t have a budget and are afraid to see how much they owe each month compared to how much they make…. Why didn’t they teach basic finances in school, I’ll never know why..
Good luck…Glad you were able to write and join in on the conversations. Once you start talking to people in the same boat it helps stay motivated and inspired by others fighting to get through their situations.
Long story short on his credit….He fell behind in his mortgage a couple of years ago and the house went into foreclosure. His credit was shot so his Mom co-signed a loan to pay the mortgage, attorney fees etc… he has checked into several different [places to refinance and some have considered a bandaide loan which would lower the mortgage for a couple of years so he can get his debt paid off and credit score up but when it comes time to complete this loan they can’t seem to approve it. He has not been late on a payment since the foreclosure but has not been able to pay off his old debts. We are just barely squeeking by. We continually monitor his credit and it is gradually going up but not quick enough.