Reports released in late September and here in early October have shown that delinquency and debt still remain a problem in the lives of many consumers as everything from home loans to personal loans and credit cards are still a major hindrance in the lives of consumers facing what they feel to be is insurmountable debt in many ways. However, many consumers continue to chip away at various types of debt obligations, which is obviously going to be beneficial in the long run as these men and women work to reduce their overall amount of obligations, but questions have arisen over whether a substantial amount of debt could be hindering retirement savings plans that may help consumers with their financial needs later in life.
There have been many debates over whether consumers should have a priority of saving money for retirement or paying down debt obligations, which many consumers feel is an easy decision to make as having more money as a result of debt relief and production techniques could lead to more efficient savings planning and even contributions to retirement funds. However, this is where some consumers have failed to look at the definition of savings, in terms of what the officials are speaking of, as retirement savings plans and a savings plan that may be used as an emergency fund will obviously differ when it comes to how helpful these options will be when debt relief is ongoing.
Understandably, consumers who may be able to contribute to a 401(k) or Roth IRA account at the present time may benefit from doing so while they are paying down debts, but when it comes to saving money before fully implementing a debt relief strategy, this is where some officials feel consumers make mistakes. Consumers who are in a position where they can save a little bit of money in order to help them avoid using credit cards or going further into debt if a financial emergency were to arise can potentially be more helpful than paying down debts when there is no safety net.
While there is no argument against debt relief, and the sooner the better for consumers who are struggling under the weight of a mountain of financial obligations, it should be remembered that consumers who have credit card debts as an example may be reliant upon these cards if an emergency were to arise while they are paying off what they owe, which would obviously set them back in terms of debt relief. Many see this as a wasted opportunity as consumers may have used money from a savings account rather than using a credit card to meet a financial emergency during their debt repayment plan, and if this is the case, some consumers may be in a position to pay off their debts faster and begin focusing on more long-term saving strategies as well.
Again, there are few who argue that putting money aside for retirement savings will be incredibly helpful no matter if debt is in place, but when the debate over savings versus repaying arises it may center around the fact that financial officials simply want consumers to have an emergency fund ready to use if problems arise, and not necessarily as an argument against putting money away for retirement while one is paying down debt obligations.