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Saving money VS Paying off Debt

What would you choose: to build your savings account or to pay off debt and start technically from zero?

Most financial advice is around building security nest as early as possible such as:

- emergency savings 

- retirement savings

- vacation/travel savings 

- school/college savings 

- investment savings 

- cash savings... in case the ATM doesn't work

And the list goes on!

Credit. Credit can get very confusing.  One day you get all these pre-approved credit cards at lucky  3% interest, and you think "Why not... nice back up plan" , but then later they magically change to 15-18% and you have no idea why. And that's the good case scenario! It could be worse, such as 22-23% and more plus annual fee.

Mini lesson.

Let's say you carry a balance of 5000$ on a credit card at an interest of 18%. The required min payment is 88$ but of course you may want to pay more, let's say 110$, to help yourself feel better or maybe thats all you can realistically pay. With this speed it's going to take freaking 77 months or over 6 hell years just to pay off 5 grand. And you will end up paying 3 461$ in interests - the money  that can be in your savings! Stupid, right?




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Listening to the Secrets of the Millionaire Mind is so familiar to me. First hour is great and I would reccomend anyone to listen, even if you think you already know it.

In the next hour T Harve Eker shares his tips on how he manages his money which is based on simililar principle I previously mentioned. According to Mr Eker he separates money into 6 different accounts. Each account is aimed towards a specific goal such as saving or paying for current expenses. Listen to the audio if you are interested to hear the  details.

From my experience, separating money does actually work. Let's say, I want a new bike, so if I put X-amount into my savings jar each month, then of course, I'll get my bike in a timely manner unless I just put my purchase on a credit card today.

The problem that T Harve Eker hasn't really addressed is that most banks, that I know of, charge a maintenance fee for each account you have with them, unless you able to meet the min criteria to avoid the fee. 

For that reason, in his presentation Mr Eker said that each member of his family has 4 accounts (or 4 jars)

Now, I don't know his bank's min requirements, but here is my bank's monthly fee as an example:

Checking account: 12$/month.  

To avoid the fee: maintain montly min of 1500$ or set up direct deposit (this depends on the employer)

Savings account: 5$/month or maintain monthly min of 500$ to avoid the fee.

So, if let's say each member of our household [3] had 2 accounts as a start, the fees would approximately look like this:

3 × 12 = 36$

3 × 5 = 15$

36 + 15 = 51$ 

51$ per month just to maintain 6 accounts. 

51$ × 12 month = 612$  / year [REALLY? I CAN LOOSE MY SLEEP RIGHT THERE]

One direct deposit thanks to my husband being the head of the household only saves 144$ a year:

612$ - 144$ = 468$ frustrating fees a year 

T Harve Eker [paraphrasing] :

"Don't focus on a few bucks, focus on the main goal... which is what? Your financial freedom!"

He says that you can always negotiate with your bank. In his example he said that he would move his money into another bank.

"No problem, Mr Eker. Here is your fee back"

I don't know how would that work for your bank. Are you moving millions?







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You could always use more debt to build wealth.  Borrow more money to start a profitable venture and quickly pay off your credit card debt.  You can also get a consolidation loan from a bank to get a lesser interest rate when consolidating all your credit cards into one payment.

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