Is it better to use our tax return money to pay down debt or build up our savings?
Unless you have a magic savings account with a higher annual return than any of your loans (credit card, student, mortgage), pay down your debt. Say you put $1,000 in savings. You might make $30 off of that in a year, but you’ll also owe an extra $100 on a $1,000 debt that’s been racking up interest. Your net profit: -$70. Bottom line: Route your return to whichever debtor is charging you the highest interest.
Nestpert Brett Graff, The Home Economist and former government economist
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