A debt is created when a creditor agrees to lend a sum of assets to a debtor. Debt is usually granted with expected repayment; in modern society, in most cases, of the original sum plus interest.

It depends on the ratio of available credit to your debt obligations. Your point makes sense if you have a high mortgage or a lot of department store credit but otherwise you can maintain your obligations using the actual credit. If you have credit you can just write yourself a cheque from the credit facility and then use those funds to pay your credit obligations. It is no different than having the money in a savings account.

Hey Millie,
I have to disagree with you regarding high interest debt..
Even though you are paying 29%, it's important to have cash reserves in place.. if you lose your source of income, a cash reserve will help you keep to your agreements with your creditors..

If you've got high interest credit, then try to negotiate it down...

I see your point... but many people don't even have emergency cash reserves in place.

Only one is a good reason not to save and that is debt. It doesn't make sense to have savings if you have debt and easy access to credit.

Insurance is rarely a good idea. If it is required for legal or contractual reasons then fine but I would never buy insurance unless forced to and never more than the minimum required.

In fiscalfizzle's post he mentions that there are 5 Good Reasons Not To Save Money
http://www.fiscalfizzle.com/2010/01/dont-save-money/

1. Paying Off High-Interest Debt.
2. Temporary Job Loss.
3. Building a Checking Buffer.
4. Improving Insurance Coverage.
5. Anti-Savings Philosophy.

This is my point of view...

omg... that's crazy... you're going to forego saving for retirement to pay for insurance?

I've got 20 years until I retire... I'm self employed and will not receive benefits if I get sick or injured.... I'm pretty excited about having enough reserve in the bank to carry me for a while. I can understand some of your other points..

Your other point assumes that you're going to retire in good health and still be able to work... What happens if you're disabled, you've had a stroke, etc... You can't really predict that... if you've had a stroke, and you have no savings, you're pretty much screwed.

I kind of disagree with your post.

What do you think?