Paying off your debts is essential. But saving for emergencies is equally crucial as well. So what will it be for you? With the bills and obligations that you need to fulfill, how can you save money and at the same time pay off your debts? It may be challenging to prioritize between the two, and you are not alone in this journey.
Ideally, it would be good to do both. But if you are in a situation, like many others, and you need to decide which is more important, here are some thoughts that can help steer you in the right direction. The best way to do it is to do both simultaneously. Slowly drop in a few dollars in your savings and pay a more significant amount towards your debt. Financial experts are clearly saying that it should not be an all-or-nothing scenario.
The reason behind preparing for both at the same time is that you might wake up one day, old and grey but still in debt and nowhere near living a comfortable retirement living. Here are some options that you might want to consider to start you off on your journey to financial freedom:
1. Continue paying the minimum payment requirement for your debt and, at the same time, begin building a small nest egg worth a month’s living expenses. Let’s say that a small nest egg is $600; once you have that safely tucked away, you can now start adding a little to it while giving a more considerable amount towards debt repayment.
2. You can consider another option: you pay more than the minimum debt repayment and then slowly start building your nest egg on the side. Remember that a little, when done constantly, will go a long way. For example, you are starting with zero in your nest egg goals, setting aside $10 per month will allow you a $120 savings in a year. If you have extra money, you can always add more and not limit yourself to $10.
3. Commit to disciplining yourself to set aside a minimum amount for your debt repayment and build up your savings. When the paycheck arrives, set your designated amount automatically. This way, think about it as paying yourself first before everything else.
It may be challenging initially, but once you get into the habit of doing this, it won’t be that hard anymore. The most important thing to do is to start doing it, no matter how small the amount may be.
Need some help with your debts? We’re here for you!Get Free Debt Assessment
Some of the articles you can read to help manage your finances