No matter what's going on in the economy, it's always a good idea to minimize debt and also have enough money to support your daily expenses and lifestyle. A solid debt reduction strategy includes a savings plan. Because money market accounts offer security, flexibility and a way to earn interest on your deposits, these types of accounts can be a great place to grow your savings. Take a look at the following steps for saving with a money market account and reducing debt.
Establish a savings routine. Start by putting aside a certain amount of money at regular intervals. Many banks offer automatic transfers that you can set up to occur at whatever interval you choose. No matter how you do it, creating a habit of paying yourself first will help your balance grow.
Set up an emergency fund. Financial experts agree that an emergency fund is essential to sound financial planning. Once you have a set amount in your emergency fund, you can begin to work on your debt reduction. This way, when unexpected expenses come up, you can address them with your emergency fund without adding to your debts and derailing your debt reduction efforts.
Eliminate high interest debt. Be diligent in paying down those high interest debts by paying more than the minimum payments where possible. Try funneling any extra funds each month to those debts to help the balances decrease faster.
Beef up your emergency fund. Once you've eliminated your high interest debt, you can concentrate on saving even more in your emergency fund. Most experts recommend having six months of living expenses saved in an accessible account like a money market account.
Review spending habits. Once you've established a savings strategy and committed to reducing your debt load, review your spending habits to see where you can make positive changes. Don't get discouraged if you're struggling with a large amount of debt. The cumulative effect of consistent effort and taking steps like setting up an emergency fund will help to keep you motivated to save.
A money market account can be a useful component to your savings and debt reduction strategy. An Ally Bank Money Market Account requires no minimum balance to open and no monthly maintenance fees. You get free standard checks and a debit card. You can use any Allpoint no-fee ATM—plus receive up to $10 reimbursement for fees charged at other ATMs nationwide each statement cycle. We compound interest daily to help your money grow faster and your deposits are FDIC-insured up to the maximum amount allowed by law. Explore your savings options at Ally.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.