Comments on: A Gaping Difference Between US and UK Money Advice

By: Harry Swift

Harry Swift — Tue, 17 Nov 2009 10:07:53 +0000

Money always get in used when it is keep safe.Because in a critical situation we should have some backup to handle our situation.

By: rozyna

rozyna — Thu, 03 Sep 2009 23:09:28 +0000

so i nedd help i brought something online and it says its 5.99 but in uk pounds so i need to howmuch that is in us dollars someone help me???

By: Truthspeaker

Truthspeaker — Fri, 01 May 2009 19:33:09 +0000

I would guess it has something to do with paying the interest and common sense, rather than semi intellectual bullshit theories that people are trying to apply here.

Pay off debt = less fees for debt = more money.

Not that tricky a concept, really. Explains a lot about the good old US economy, and not cancelling world debt.

By: Jake

Jake — Fri, 01 May 2009 02:03:44 +0000

When you pay off all your debt before you start saving you free up the greatest tool you have available to you in building wealth, it’s called your INCOME. You can never borrow your way into wealth. Wish I could take credit for this, but http://www.daveramsey.com taught me almost everything I need to know about building wealth.

By: David Stillwagon

David Stillwagon — Fri, 01 May 2009 01:48:25 +0000

It is always good to have some money in the bank for a rainy day. Paying off your debt is fine, but you might need a little extra cash if an emergency arises.

By: Jim

Jim — Thu, 30 Apr 2009 17:29:34 +0000

1. Debt interest is higher than savings interest
2. In Britain, savings interest is taxed, while personal debt interest is not tax deductible.

If you save UKP100 at say 4% and pay tax at say 25%, you get UKP3 after tax. Instead you could pay off UKP100 of debt which if it’s costing you say 8% or UKP8. You’re UKP5 better off if you repay debt. Even more if it’s credit card or hire purchase debt.

By: Mike

Mike — Thu, 30 Apr 2009 16:49:13 +0000

There are also differences between US and UK. We do not have to worry about medical bills etc. Plus there is a basic state pension (dreafully low but still) and other pluses. Well, there has to be some benefits given the high taxes on companies and individuals.

No matter what, though, putting your spare cash where the interest rate is the highest is a good idea – be it savings or debt.

By: John

John — Thu, 30 Apr 2009 16:38:20 +0000

I suspect the advice is to put paying down debt ahead of major savings vehicles such as stocks. For purposes of their advice, I doubt they meant to put debt ahead of a modest emergency fund. Similar advice is often given this side of the pond, though with the exception of the first mortgage on your primary residence.

What stuns me here is how many people advise to put some form of non-emergency savings ahead of even credit card debt.

By: Um, really?

Um, really? — Thu, 30 Apr 2009 16:31:27 +0000

You should always pay off debt first. Debt accumulates at high interest rates, and savings at low interest rates. That’s how a bank makes money (real banks, not the imaginary banks we have these days).

By: Drea

Drea — Thu, 30 Apr 2009 16:14:31 +0000

Thanks, Barnabee and Beth. That makes sense. My thinking was that you always need an emergency cash cushion (savings), then, once you have that put away, you start paying down debt. But if you have access to credit, that cash cushion isn’t as necessary.

The other thing I read here all the time is that you should always put money into your 401K, which provides tax breaks as well as a retirement lifeline. That has always sounded like a bigger priority than paying down debt, which you can refinance or transfer anyway.