The problem that arises with this situation is that you have to figure out how much money you are paying out for your debts, and how much money you are making with your interest from your savings. There are also the instances that some debts have tax benefits. So losing that benefit could cost you money also.

Figuring out what types of debts you have, might very well be the first step in deciding what debts to pay off, and then you can decide what you want to do as far as savings after that.

The debts that are only costing you money are the debts that should be paid off as soon as possible. The reason of this is that there is money going out paying on items that have no long term value, and therefore there is usually no tax deduction benefits from these. These debts are only costing you money.

The debts that would be considered good debts are the ones that the interest paid on the debts can be used as a tax benefit. This would be like a home mortgage, a small business, or the ownership of a rental property.

After you have paid down the debts that are costing you money from the interest, you can now successfully start investing the money you are saving from not having to pay those debts into your own future.

The debts that you are focusing on that would need to be paid off, have an interest rate of anywhere from 12%-30% interest. That money you will be saving, will then be turned around and accruing you interest.

There are some basic pros and cons that you can consider when deciding how you want to pay off your debts, and start your savings plan.

Pros and cons of paying off debt

 Reduce high interest charges
 Shows a better credit rating for good debt to obtain better interest rates
 Some good debt will lose the tax benefit if paid off
 The money available from paying off the debts can turn around and start gaining money from your savings

Pros and cons of saving money

 The beginning of your future security is started
 You gain income from the interest you have accruing from your savings
 The interest you gain from savings is likely not as high as the interest you are paying on debts
 The money in savings is producing income from simply sitting in the bank
 Some saving plans like 401K plans have great tax benefits
 Money that is out of site is out of mind
 You are able to borrow against your own money when a need arises instead of going into debt, you just pay yourself back

Weigh out the debts; get rid of any high interest debts that are costing you money. Hang on the debts that would have a tax benefit. Then get ready to find the best savings portfolio plan for you to set up your future. This process has been proven to work over the years.