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Personal Finance

Pay off debt, then start saving and investing

I took the plunge this weekend and expunged my debts to the depths of the hell from whence they came. It was a tough move for some reason, even for a cold, calculating accountant. Subconsciously, I held on to the debt in order to keep my asset balances high. Artificially high.

This is a bad move, and you don’t need to be a bean-counter to follow the logic. I had credit card debt at 18%, a personal line of credit at prime + 3%, savings earning me 3.5%, and a chequing account costing me the monthly plan fee less a paltry amount of interest. In summary, a net cost to me.

I had enough cash in the savings and chequing to pay off the debts, but for some reason I had held off on doing so for months, all the time allowing the interest costs to pile on. I felt more secure maintaining the artificially high cash/savings balances. Why is that?

It wasn’t until I started tracking my expenses using the so very Web 2.0 tool expensr.com about two weeks ago that I realized the time had come to man up and pay the debt off. Only then could I save with a clean conscience, knowing I had no interest expense completely wiping out the interest I would earn on savings.

Note: I plan to write a post soon about expensr.com. It has really helped me get a hold of my expenditures and features a mobile version I can access on my cell phone to capture cash outlays as I make them.

So now you all know my dirty little secret. I’m an accountant and auditor, I find other people’s mistakes and control weaknesses, and until this weekend I wasn’t even managing my own finances like a pro!