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Savings vs debt

Apr 13 2012 07:46

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A Fin24 reader asks:

I am 25 years old and would like to start saving. Would you recommend that I pay off my debt before I start?

Prem Govender, chairperson of the SA Savings Institute, responds:

It is always good to start saving consistently from the day you get your first job. During this period, make sure that you learn the magic of compound interest.

Please put aside at least 15% of your income every month in a safe investment. Use credit sparingly. It is cheaper to wait until you have saved the funds yourself.

If you are in debt, pay it off as soon as possible and cut out your credit and store cards.

This is because it is better to spend money you have earned than spend the money you still have to make. Remember, cuts in interest rates should be used to settle debt first and not to take on more debt.

 - Fin24

 
investing  |  saving  |  debt
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