Can someone please explain in a nutshell why I should either pay my debts or continue putting money into savings?

Right now, I stopped saving and put all my extra money into paying off my debts.

I'm not sure if I'm doing the right thing.... should I be doing both?

You should have about 1000 for an emergency fund, then radically focus on paying off your debts. Side jobs, garage sells, tighten your budget etc. The sooner you are debtfree, the sooner you can build wealth.

Read books like The Wealthy Barber, Financial Peace and The Millionaire Next Door. Having a plan for your income will change your financial fututre.

There is much more value in having a good credit standing than having money in a savings account!

Credit card debt is expensive. Get rid of the debt first and you'll have more money to put into your savings account, or investment account. If you can afford it, pay more than the minimum amount due.

There are ways to do both and I think your best bet would be to try and do both. You should not completely neglect your savings if you do not have to. Eventhough most usually do neglect their savings. A debt roll down program can help you pay off your credit cards quicker. This is not something that will affect your credit. You also will not have to neglect paying one card just to pay another.

You should pay the credit cards off first because you are probably paying a high interest rate on those +10% but probably earning between only 1% & 3% at the most on your savings account.

You will save a ton of money in the long run by paying the credit cards first.

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-Jesse

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You should make sure that you pay off your debts as soon as possible as most everyone has mentioned. You should then begin to build your wealth through a 401K program. If you don't, your debt can add up quickly and defeat the purpose of you saving money. Best of luck and I hope this advice helps.

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Pay debts now. Do not wait.

Would you borrow money at the interest rate that you have on your credit cards to put in a savings account?

That is what you are doing. You are borrowing money at 15% from Visa, let's say, to earn less than 1% interest in a savings account from Bank of America.

Pay your balances.

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Most personal financial pundits recommend that you do both. But only to a predetermined savings amount. That amount is typically a minimum of 3 months worth of living expenses.

This is an emergency fund. Once established it will help prevent future debt if a crisis arises. Without it you may be forced to incur more debt if an emergency occurs.

Trying to figure out how much money should go toward savings and how much towards debt repayment each month is a fine balancing act. Once you reach the 3 month goal you then increase your debt repayment amount.

Personally, I see this as long term advice best to be used if it is going to take more than 12 months to pay off those CC’s. If you can pay that debt in less than 12 months then do that first.

Debts usually have far higher interest rates than savings, so it would actually cost you money in accruing debt if you paid into savings instead of debt.

2c.