Do I Pay off Debt OR put Money in Savings?

17 June 2019

How many of you are deep in loan/credit card debt because of college or simply trying to get a head start in your industry? Me too! I didn’t go to college, but I’ve had many times since starting when I’ve truly needed help. Whether that was putting something on a credit card or taking out a small business loan, it’s refreshing to know you have access to additional money but it also brings along other emotions like guilt and anxiety. How will I pay this off? When will I pay this off? I’ve enlisted my good friend and financial advisor Ashley Horne to answer this question today for ALL of us (myself included) about whether to put money in savings or pay off debt first?

I’ve talked about debt and investing on Life Unfiltered & my YouTube in the past, search for “investing” to learn about my favorite two apps Robinhood & Acorns and how easy it is to save! There is no excuse to not be saving, whether it’s $2 a week or $200. You save for your future now, and you’re set for life.

According to Ashley (who emailed me her opinion and advice this morning),

People tend to try to pay off their debts by throwing everything at it including the kitchen sink. What happens when you do that (unless you’re going to commit to being a full-time hermit crab or guarentee no emergency will come up in your life, you won’t have any money in savings to cover any emergebcy and you’ll end up putting it back on a credit card. You simply won’t have a chance if you haven’t saved anything.

Example: your car needs new breaks or you have to go to the dentist, or the house needs a repair…maybe your BFF is having a birthday party and you’re scrambling to put together a gift because you have no money in savings. You’ll resort to having to use your credit card because you have no money in the bank or just enough to pay your expenses, but nothing for a rainy day.

Work on your budget now, live below your means and get to three months of fixed expenses in your savings account. By then you’ll be more financially and a bit more mentally stable regarding debt that you can start tackling the debt more aggressively.

Thank you Ashley for answering this question for all of us!