Debt basics

How do I pay off debt and save at the same time?

It may surprise you to realize debt isn’t all bad. You can have good debt; debt that builds equity for you and tends to have lower interest rates, like your:
  • Student loan
  • Car loan
  • Mortgage

Of course, there is bad debt as well; types of debts that, if not controlled, can make your credit score go down. These include:
  • Credit card debt
  • Cash or paycheck advance loans

Ways to keep debt in check

You can:
  • Create a budget
  • Pay debts with higher interest rates first
  • Pay more than your minimum balance each month

Your credit score is impacted when you pay on time or late. You can always increase your credit score by making regularly scheduled payments on things like credit cards and loans. You can also help boost your score by having a good debt-to-income ratio. Generally, having debt that equals less than 35% of your annual income is considered positive.

Think about paying cash instead of charging

If you can’t afford to pay cash for it, don’t charge it (if you do charge it, pay off your credit card balance during the grace period when the bill comes).