The amount of debt you carry will adversely affect the amount of money are able to save. When you are buried in debt you are making payments to interest that could be going toward your savings. You could be gaining interest on savings rather than paying it out on debts owed.
If you think of saving money to buy the things you want rather than using credit cards you can save a lot of money each month. But it is up to you. How important is it to have what you want right away, versus not having to pay high interest charges?
The bigger concern is not the purchase of isolated things, but the matter of saving for your future. An IRA (Individual Retirement Account) will help you put away money for your future. What are the negatives and positives of this?
The money you save in an IRA is a tax deduction, so there are tax benefits. Also, as you save money you benefit from compounding interest on your savings. A look at an online calculator will give you a good idea of how your savings can grow as interest compounds.
The tax benefit is that you are not taxed on the money until the future when you use it. Normally your tax rate will be much lower and you will pay less taxes on the money than if it was taxed at the time you earned it. This is not true in every case, but with the majority of people it has proven to be the case.
There are many IRA options available today and the system has evolved a bit in recent years. But the basic principle is the same - up to $2,000 per year deposited into an account tax free.
One new option is the Roth IRA. It has some flexibility in that if you are 59 years of age and have had your account for at least 5 years you can make tax free withdrawals from your account. Also money can be drawn if you are purchasing your first home.
The 401k (named after a provision in the 1978 Internal Revenue Code) is also a very popular long term savings program. Employers put tax-deferred money into an account for their employees. No income tax is paid on the funds until they are taken out of the account.
Is credit counseling the best way to get out of debt ? It might be, but there's no single best way for everyone. Visit the Debt Smackdown website at http://www.debtsmackdown.com for more helpful tips & advice about clearing up your debt.