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You should pay down your debts more, and invest a little.

There is nothing more nerve wracking, then having debt hanging around your neck. It restricts what you want to do in life, and there always seems to be a never ending stream of it.!

You also have to be realistic, and know that things come up, and you don't want to be adding to this debt you are trying to pay off, so you do need some emergency funds.

I would open a high interest savings account, and have a small percentage of your paycheck automatically transferred to this account. This way you never see it, and you will get used to spending less, and its there for emergencies.

But don't make the percentage too high, as you need to attack the debts. The first debts to attack, should always be consumer debt, such as credit cards, and then car loans, and then the mortgage.

If you have numerous credit cards, try and get them onto one lower interest card, and then
STOP using the card, and pay it down as fast as you can. Set up your own payment schedule and stick to it.

Paying off consumer credit, such as credit cards, is better than investing, as it is hard to find anything to invest in that is making 28% interest!. By paying off these cards, you could be saving yourself anywhere from 18 to 28% in interest.

If you can't consolidate onto one card, consider getting a consolidation loan from the bank, the interest rate will be lower, and you can get rid of the debt faster. If you don't want to deal with the bank, then at least come up with a plan of action. Pick a card or debt you want to attack first, and pay as much on it as you can, while paying the minimum on the other debts. Once you have the first debt gone, take that same money and apply it to the next one. This should create a snowball effect. Put all your efforts into getting rid of consumer debt... Don't even look at the stock market!

Therefore if you have extra money coming in, that you are considering investing.. Invest in yourself first, and get rid of that high interest credit debt, its the best return out there.

Learn more about this author, Diane Palmer.
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