Personal debt relief through various repayment plans are often seen as going hand in hand with saving strategies that consumers may implement to help them erase debt, but for consumers who may be in a particularly troubling situation or who may be unemployed, there is question as to whether combating debts should be their main priority or if saving money for emergencies, like when unemployment benefits expire, should be the focus for these individuals. Obviously, consumers who are in a particularly troubling situation will often find that meeting certain obligations is close to impossible, and many start using their savings account as a way to pay down debts that are overwhelming, in the hopes of remaining in a good credit position.
According to an article on Bankrate.com, there are some individuals who are concerned over whether they should be using additional funds they may receive to pay down debt or if they should save this money in the hopes that their financial position will improve, especially when factors like unemployment are in the picture. However, there are advisors who will differ on this opinion, as some feel that any consumer can never truly be saving money as long as they are in debt and erasing debt obligations, particularly debt that may have a high interest rate, should be the priority of a consumer rather than putting money away in their savings.
One argument of saving money rather than applying additional funds towards one’s debts is that money that is in a savings account or being held for other purposes can be used when an emergency arises or a consumer’s resources have been exhausted, but again, there have been consumers who are running through their savings account and, if unemployment is the problem, for example, and a job is not found, a consumer will be in a very difficult position than if they have exhausted all of their resources first before turning to savings.
Many advisors often counsel consumers to simply talk with their creditors when unemployment or a particularly troubling financial situation has arisen, like cutbacks at a job, as there are some lenders, like credit card companies or even a bank, that may offer a consumer a forbearance option or reduced monthly payments for a set period of time. Some consumers may turn to credit counseling as a way to find areas to save money in their financial life and combat debts so that they do not have to use savings, but there are some who have turned to debt management plans, which offer a lower payment plan each month through a credit counseling agency to creditors.
While consumers are also prompted to explore options in their personal life before seeking outside help, these individuals who may talk with their creditors and ask about assistance but are unsuccessful will obviously want to seek out credit counseling, if they feel it is best for their situation, before missed payments begin. While there are various opinions on debt management programs, they can be helpful for consumers who are on the verge of missing payments or who may want to avoid using their savings to meet debts when there is no certainty that their financial position will improve in the near future.
There are consumers who obviously will want to keep money saved for an emergency and, rather than using personal funds to pay off debts may want to seek out either a forbearance or more affordable payments for a set period of time, but some creditors may look at a consumer’s financial position and, if there is money in savings, may be of little help when it comes to offering relaxed payments or even delaying payments. However, consumers who may not find help in dealing directly with their creditors may, again, benefit from talking with a nonprofit credit counselor, as long as proper research has been done and the consumer finds a reputable counseling agency, as these counselors can be helpful in keeping consumers afloat when they feel that their debt and financial position is simply too much to bear.