Should You Pay Your Debt Before Saving?

Bonjour mes amies! What comes first, the saving or the paying off of debt?

Because I am completely obsessed avec polls, I asked mes amies on Insta what did they think was the best course of action: paying off debt or saving.

Spoiler alerts, there isn’t a right or wrong answer. Whether you should save money or pay off your debt first depends on several factors, including the interest rates on your debt, the amount of debt you have, your financial goals, and your current financial situation.

However, there are a few things to consider to help you make an informed decision:

  1. High-interest debt: If you have high-interest debt, such as credit card debt or payday loans, it’s generally advisable to prioritize paying off that debt first. High-interest rates can quickly accumulate, making it harder to get out of debt. By focusing on paying off high-interest debt, you can save money on interest payments in the long run.
  2. Debt load: Consider the amount of debt you have and how manageable it is. If your debt is overwhelming and significantly impacts your financial well-being, you may want to prioritize paying it off to reduce financial stress. But (because there’s always a but), if you have low-interest debt with manageable monthly payments, you may choose to save money simultaneously while making regular debt payments.
  3. Interest rates: Compare the interest rates on your debt with the potential returns on your savings. If the interest rate on your debt is higher than the potential return on your savings, it may be financially beneficial to focus on paying off the debt first. However, if your debt has a low-interest rate, you might consider saving and investing your money if you can earn a higher return.
  4. Financial goals: Consider your short-term and long-term financial goals. If you have specific goals, such as buying a house or starting a business, saving money towards those goals might be a priority. But (because there’s always a but), if your debt hinders your ability to achieve those goals or causes significant financial stress, it may be better to address the debt first.

What’s my opinion?

Always, always, always save. I have shared beaucoup blogs about how I saved money when I was a single mom earning less than $19,000 a year; click here to read one of many finance blogs.

The key is to be realistic with your savings. If you have beaucoup debt and your goal is to pay off as much as you can, save realistically, whether that’s $5.00 a week or $0.50 a day.

Building an emergency fund is essential for financial stability. I’d go as far as saying that having an emergency fund can keep you from going into debt. If you have an emergency fund and the engine on your car blew, or the water heater in your home went haywire, you have a bit of a buffer for repairs versus having (choosing to use your credit card and having to are two totally different experiences) to use credit. I have always aimed for an emergency fund that could cover three to six months of living expenses.

Et voila mes amies, there is no one-size-fits-all answer to whether you should save money or pay off debt first. Assess your personal circumstances, evaluate the interest rates, consider your financial goals, and strike a balance that works best for your situation. It may be beneficial to consult with a financial advisor who can provide personalized advice based on your unique financial circumstances.

Until the next blog…

Ciao for now 💋

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  1. Anonymous

    Thank you so much for your advice.

  2. Stephanie Xialing

    Very good, Jessie. I agree, there’s no right answer because everyone’s situation is different. Personally, I set aside a biweekly amount for my savings and budget with the rest. This helps because I am able to know how much I can spend on my credit card (to earn points) and be able to pay off my credit card to avoid interest! I look at it as double savings!

    • So true! Personal finances are just that, personal. The key is to be a well informed and realistic. Merci for your time 🙌🏾

  3. Product_snob

    Great article

  4. ElleXNC

    Bonjour mes amies! Do BOTH at the same time…save/invest (no matter how small the amount) AND pay off/down debt at the same time! It can be done!!!

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