Although its important to save most people find it preferable to pay off debt such as credit cards as quickly as possible and then budget funds to invest. There is good and bad debt and most of us find that some level of debt is necessary. Debt can be good as long as its used wisely and a personal budget is a simple tool to help you keep you on track.

Your mortgage is often the cheapest source of debt you have but it could still make sense to overpay on your monthly payments. First and foremost, all of the higher interest debt that can be settled should be done so first, before considering this option. Basically, any money that is considered for overpayment should be money that would otherwise go into a savings or an investment account, meaning that all other budget categories are fully funded for the time being.

Debt elimination is the key to financial freedom because as long as you owe money you can’t consider yourself financially free. If you don’t eliminate debt your future earnings do not belong to you but to your creditors. While there are a number of steps involved in becoming financially free the need to get out of debt first is paramount.