Should I Pay Off Debt or Save Money This Summer?

Needing to pay down debt while also saving money often feels like a “chicken or the egg” problem. Which comes first? It can be tough to choose between saving for a fun mid-summer getaway or tackling the lingering credit card debt that’s still hanging around from the holidays. Here’s how you can decide whether to focus on paying off debt or saving money this summer.
Should I Pay Off Debt Before I Start Saving Money?
If you’re holding onto debt, especially high-interest debt, it can be hard to see past the interest building up. Paying off debt makes sense before starting to save money in certain situations, including:
Should I Save Money Before I Start Paying Off Debt?
For many people, saving might feel more important for financial security than worrying about debt. Prioritizing saving over paying off your debt makes sense in a few situations, including:
A Winning Combination
Sometimes the right option is to simultaneously focus on paying off debt and saving money. When you create your budget, see if you can find a number that fits to funnel money into savings while putting a similar amount towards debt. Plus, you might feel more confident if you see the amount of debt decrease while also seeing your savings build.
The Bottom Line
For many people, striking a balance of debt paydown and saving can be an ideal strategy. As a rule of thumb, setting up emergency savings and paying off high-interest debt should take priority. Depending on your unique financial situation, you’ll need to decide which strategy will have the most impact on your bottom line this summer.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
Source: iQuanti, Inc.