Should you save pennies or save big with bad credit?

For years, customers were being told that they could save money by saving on the little things – saving the cost of a coffee a day can add up to hundreds saved in a year. Now, however, consumers are being told the opposite. A few new financial books are recommending that customers should place their focus on large expenses – such as housing, cars, and credit card costs – to save big.

The thinking is that while you can save hundreds of dollars by scrimping on small expenses, you can easily save thousands of dollars or even tens of thousands of dollars by focusing on your biggest expenses. For example, getting rid of a car can save you thousands a year in car loans alone. Even if you keep that car but negotiate a better rate, pay in cash, buy a cheaper car or negotiate car costs you could easily end up savings thousands of dollars – with minimal time and no scrimping. Choosing a less expensive home or negotiating home closing costs can also save you tens of thousands of dollars.

Lenders know desperation and they usually get concerned when they see it in an applicant with bad credit. The time to apply for a credit card, personal loan, line of credit, or loan is when you are flush – not when you really need the money. When you are in a strong financial position, you will have the leisure to select the right lender for you and you will be able to shop around for a good interest rate because your finances are strong. If you don’t need money at once, you’ll also have the time to research loans and find the right one for you, apply, and wait for results.

When you wait until you need money, you may have no choice but a higher-cost payday loan. Traditional lenders may be wary of your financial situation and unwilling to give you cash and you simply may not have the time to research and apply for traditional loans. Build up your emergency fund, pay down the loans you have, repair your credit and apply for lines of credit and other forms of credit when you are doing well so that the money will be there for you if and when you need it.…