When it comes to saving and paying off debt, both are wise things to do but which should come first? Let’s take a look.
- When it comes to saving, keep a few things in mind. First, set up an emergency fund and a rainy day fund. This way you will have money in case of an emergency. Second, make contributions to your company’s 401k, if available, or to your own personal retirement account. Lastly, with savings, take advantage of compound interest. The savings will help you even if a new debt pops up, as you will now have cash to help pay for it.
- There are many things that go into paying off debt. Ideally, you want to have no debt, and if you do, pay it off as fast as you can. Other than living freely without the worry of debt, paying your debt off regularly and quickly will reduce the amount of interest you owe over time and can boost your credit score. Finally, if you don’t have debt looming over your head, you can fully focus on saving and moving towards your financial goals.
At the end of the day, saving and paying off debt are very important. Make a plan to put money aside for both of them. Try to get rid of your debt as fast as possible, but don’t forget that you need to be saving.
We would love to help you make a plan and walk you through this stressful part of life and find out what’s the best plan for you. Give us a call!