Home Forums Main Discussion Forum Save or Debt?

This topic contains 2 replies, has 3 voices, and was last updated by  Fred Kinkaid Feb 16, 2017 at 5:21 pm.

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    Dan Jackson
    • Posts: 20

    From a purely math point of view, it’s almost always better to pay off debts before putting money into savings. There is one exception. Contributing towards and emergency fund.

    I know some people may have a different perspective. Thoughts?


    Nathan Smith
    • Posts: 7

    Some people do have a different perspective, but I’m not one of them. I firmly believe that getting rid of debts should be the top priority. Once those debts are gone, the ability to save a LOT of money instantly becomes easier. Your options open up significantly. To me, getting debts paid is absolutely #1.

    That doesn’t necessarily mean NO saving, though, until debts are paid. Of course you don’t want your bank account at close to zero after everything gets paid. We all need a buffer as well as an emergency fund. Assuming that the emergency fund is already there, I’d probably do a 15/85% split between using the remaining money to save/pay off debt.

    And this is especially true with shorter term debts – basically anything but a 30-year mortgage. But even with your mortgage…principle-only payments can make a huge dent, and having no mortgage to pay from month to month is absolutely hard.


    Fred Kinkaid
    • Posts: 23

    I totally agree with this. Saving is like a muscle or a skill – you have to put in practice to build it up. Even just saving $5/month at first while you viciously attack debts can help to build up that “savings muscle” so it becomes a habit, and you carry it on once the debts are paid off.

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