What is the first thing you would do if you won the Lottery? Buy a house, take a trip or pay down your debt? If you picked pay down or off your debt, you are in good company according to a new study by the National Foundation for Credit Counseling (NFCC), finding that 87% of people say their first priority if they win the lottery is to get rid of their debt.
“This survey demonstrates that eliminating debt is much more important to Americans than building savings,” said Bruce McClary, spokesperson for the NFCC. “Debt can get in the way of important financial goals when it grows out of control, but there are ways to turn that around without neglecting savings.”
The top five
What are the top things people will do if they win the lottery? Yes, paying off debt took the top spot but other aspects came up as well including:
• Grow their savings and invest some money 8%
• Get a new car or house 3%
• Do some traveling and explore entertainment options 1%
• Share some cash away to family and friends 1%
NFCC Tips for reining in debt
Debt is a hot button issue for many Americans, and the NFCC has come up with some ways people who have not won the lottery or received another financial windfall can get a handle on their debt.
First things first, they suggest rethinking your approach to managing debt. Part of this may well be upping monthly payments to pay down debt faster, and to do that with accounts that charge the most interest, thereby saving money in the long run.
What about your 401(K) or personal savings? They suggest paying yourself first, before paying off expenses, in order to keep your goals and completing them in the forefront of your mind.
What if you have more than one account that needs cleaning up? They suggest combining them into one credit card or getting a loan to roll them all into, effectively consolidating your debt. They suggest that this approach works best if the interest rate and fees are low.