Q: I've racked up a fair bit of credit card debt the past few months while unemployed. Now that I'm working again, I have just enough in the bank to cover what I owe. Should I use my savings to pay off my credit card?
Jim: There are a lot of variations on the common question: "Should I pay off my credit cards first or put some money in savings?" The answer is "yes." That's because wise financial management is never an "either-or" proposition. It's a question of maintaining balance.
Financial success depends upon good stewardship. And good stewardship is founded upon four foundational planning principles: Spend less than you earn, avoid debt, set long-term goals and maintain liquidity. Your question sets two of these principles -- avoid debt and maintain liquidity -- against each other. But both are essential to your financial well-being.
Eliminating credit debt is the surest and highest form of investment return you can make. Not having to pay that interest cost each month is, in effect, the same as achieving the same rate of return on any monies you invest. At the same time, liquidity -- available savings, bank accounts and other resources that can be quickly converted to cash -- is indispensable in a world where the future is uncertain. An emergency savings fund can spell the difference between bankruptcy and financial survival if an unforeseen disaster arises.
I'd suggest that you lay out a plan to put some money toward debt payments each month while still earmarking some for your savings account. Make this plan a key part of your budget. You may not be able to do everything at once, but you can certainly do a little at a time -- a few dollars here, a few dollars there. Daunting as it seems, you simply have to discipline yourself to start small and build gradually. However you arrange it, it's wise to keep a hand on both priorities simultaneously.
Q: My husband is a great dad, but he lacks confidence. How can I help him understand just how important he is in our kids' lives?
Danny Huerta, Vice President, Parenting & Youth: It might help him to know that his everyday "dad skills" aren't ho-hum stuff -- to your children these are superpowers. These skills include:
-- Observation. This might not sound impressive, but it's huge. It is incredibly meaningful when dads take note of their kids' words and actions and reflect those back verbally. It means Dad is trying to see into their world.
-- Building. Fathers can build both physically and verbally. At the very least, we can all build things with toy blocks with our kids. Why not look up videos on how to build things like a homemade water slide for the backyard, or a garden? While not all dads feel confident physically building things, every dad can develop verbal building skills. Our families are fueled by our supportive words. Speak, text or write a message of love or encouragement to your kids.
-- Listening. Kids yearn to be heard. When a dad truly listens, a child feels important and loved. Listening shows that you care about the person who is talking.
-- Teaching. The three superpowers above will help unlock this one. There are so many things a dad can teach -- life skills, sports, cooking -- you name it. The key to teaching is having a strong relationship with your child.
-- Strength. Dads can express physical strength in fun ways, such as wrestling with the kids, going on bike rides or playing sports. Strength of character can help dads communicate and teach values like optimism, curiosity and hope.
Your husband may not realize it yet, but his superpowers are waiting to be unleashed.
Jim Daly is a husband and father, an author, and president of Focus on the Family and host of the Focus on the Family radio program. Catch up with him at www.jimdalyblog.com or at www.facebook.com/DalyFocus.
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