Follow-up questions. If one uses a spreadsheet and basic math, one concludes that one should pay off debt before starting to save, because debt is usually at a higher interest rate than savings. However, one frequently hears that one should not in fact do this; rather, that one should always be saving. It's frustrating, because I can show you exactly how much money I'm burning in interest payments by following this advice. Can you justify or possibly refute this oft repeated wisdom?
There's a couple circumstances where having both loans and savings makes sense. One, emergency fund - if you have a $3000 problem with your car, you can't pay your mechanic with your lack of a mortgage, you need cash. Having to go get a loan at that point isn't really practical. If you have revolving credit(credit card/line of credit) then you can use that, but a traditional loan that goes away when it's paid off is no good.
The second case is leverage loans. When you borrow for business purposes, the interest can be used as a tax deduction(in most countri...
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