Sorry I missed you last week!  Life just got a little too hectic haha! I recently guest blogged over at Kristin’s amazing blog, Life of Stones.  You should go check it out, it’s all about how to automate your savings, how much to automate, and how to stay dedicated!  Go on, I’ll wait 🙂

Back?  Awesome!  I missed you!  Ah saving money or paying off debt.  This is the age old chicken or egg debacle.  On one hand you want to pay down all your debt and be a little more financially free.  On the other hand, you need some savings put away!  No if’s and’s or but’s about it.  What made this decision a little easier for me was Dave Ramsey – yes, him again!  Go read his book!  In his 7 baby steps to financial freedom his #1 step is to put $1,000 in savings.

Save money or pay down debt?

Which means that before you even TOUCH your debt you put some mulah in the piggy bank.  After that, is when you start paying your debt off.  If you skip this step then when you have emergencies pop up – car troubles, last minute plane ticket to see a family member, etc…you’re going to add to your debt!  Not the direction we want to go in.  After you put your $1,000 in emergency savings then whatever “extra money” (Airbnb, raises, etc…) we have I’ll use to put extra on one specific debt.

Dave Ramsey 7 stepsLuckily, only one of our debts has interest at the moment, so right now that’s my main focus.  I’m using the avalanche payoff method here, by paying off the interest debt first.  If you have credit card debt though, that will probably need to be your first focus!  Credit card interest rates can be astronomically high and these debts can very easily get out of hand by just adding every day purchases to.  If possible, I’d suggest living off a debit card for the time being until your more financially sound.  You can do this!  After all, you can’t spend money you don’t have!  After my debt with interest is paid off I’ll switch to just saving for 2-3 months and minimum payments on my debts.  I usually have little goals I want to reach, like save until I get to $1,500 then switch to paying down debts, pay off a debt, then save another $1,500.  My main goal I’m working towards is to have 6 months’ living costs built up in an emergency fund, but this can take time, and I don’t want to ignore my debts!  I won’t lie – this does make paying off your debts stretch out a little longer then you may feel comfortable with.  If that’s the case, then don’t save anything after your $1,000 emergency savings, just put it towards your debt!  The main thing to remember though, is to prioritize, and depending on where you are in life your priorities can change!  Don’t forget, if you have any side hustle money, use that to pay down debt or just put in savings, but whatever you do don’t spend it!  As you can see, this isn’t 100% Dave Ramsey approved – he would suggest you throw everything at debt first!  You just have to decide what works best for you!  If you’d like to save money, then head over here where you can learn 20 easy ways to start saving RIGHT NOW!  And if paying down debt is more your style then read here for how I paid off $15,000 of debt!


Having said all of this – if you’re in your 20’s you have one thing on your side that not everyone else has as much of – time!  You need to take advantage of this!  Emergency savings are necessary, but make sure you’re putting money towards retirement!  If your company has a 401(k) plan they’ll match, make sure you’re contributing the maximum amount allowed.  If they don’t have any retirement benefits then you need to be saving money on your own!  I’d suggest a Roth with Schwab (seriously, I love this bank) to give you the best savings.  You can read here about the two banks I use and the pros and cons of both!  I know this is a pain to put money away for 40 years, money you could use like-now!  But you don’t want to get to retirement age and be financially forced to continue working!  The more you save now the easier life will be in the future. I plan on being able to live my retirement out on a beach, or the mountains, or somewhere in between – because I’ll be retired and an adult so I do what I want!

Save money or pay down debt?

The hardest thing to listen to, is right now – with all your debt – you’re broke.  You have no money to be spending where it’s not 100% necessary.  But hopefully in a couple of years you’ll be free from it and able to live life a little more free! It’s all for a better tomorrow!

What about you?  Do you have a certain way you pay down debts and/or save money?  What’s the best way you’ve learned to do either?
If you sign up for my e-mail list, I’ll send you and awesome savings tracker that helps you watch your savings pile up faster then you’d think!




Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge

This site uses Akismet to reduce spam. Learn how your comment data is processed.