People are funny. We don't always do what's best for us instead we do what feels best and try to suppress any reasons why it may not be the best thing to do. Perhaps that's why there are so many people that have both savings and debts.

It's Simple Psychology. It just feels better to save. In saving you feel like you are laying a foundation for the future, whereas on the other hand paying off debt almost feels like throwing your money away.

You're saving that money for improving your house, or for the kids' education, or suchlike, in an account with a decent rate of interest. What could possibly be wrong with that? Plenty, if you have debts. Don't Be Foolish.

There are pretty much no savings accounts that will offer interest rates as high as what the credit card companies charge. Here's an example: Say have $10,000 in a savings account at 5% per year $5,000 on a credit card at an interest rate of 20% per year How much money do you boast? After as little as five years, the answer is effectively $0 - your debt will have grown to around $12,000, the same total that your savings are now worth. It's difficult to accept as true right now, but it really is much healthier to pay off your debt. If you used half your savings to pay off that debt, you'd be in such a better place.

You avoid five years of interest on the debt, but you still get to keep that $5,000 in your savings account, earning interest and after five years, that's about $6,180. If you'd still prefer to keep your savings intact rather than using them to pay off your debts, ask yourself this basic question: is your pride worth $6,380 of your family's money? Think of Your Financial Future. When you have money enough to pay off your debt, there's entirely no reason to keep it.

Debt is for people who don't have the money, and need to borrow it. Debt costs money, and savings make money - you want as much of your finances as achievable to be savings, not debts. If your savings account and credit card are from the same bank, then you're in effect paying for the opportunity to borrow your own money from them. How ridiculous does that sound? By paying off your debt with savings you'll also be less stressed about your debts, and your credit report score will rise - getting you a much better interest rate if you ever need to go into debt again. It can be tough.

You just have to keep in mind that any money you've 'saved' hasn't in reality been saved at all. It's money you should have been spending instead of making purchases with a credit card. Of course, it feels bad to spend money thinking that you're spending away your future - but always bear in mind that when you use a credit card to spend that same money, you're spending away your future, plus interest. As it goes, if you've got the debt, then those savings have already been spent.

Get more help and advice on Debt, Credit Cards, Mortgages, Investing, Real Estate, etc. From www.1stFinanceGuide.com.