Pay Off Debt or Start Saving? What Should You Do First?

What’s more important? Paying off debt or saving money? Debt repayment is incredibly important, but if you’re living without any savings, and your current debt payments are manageable, it might be time to think about building a rainy-day fund.

Saving money for yourself is one of the most important parts of being able to pay off debt. Sound odd? Consider that one of the biggest roadblocks people face in paying off debt is the inability to cover an unexpected expense. If living paycheque-to-paycheque, unexpected bills can put immense pressure on a person’s finances, making it harder to cover other expenses, and in some cases, creating new debt.

Having access to a rainy-day fund grants a person the freedom to make bigger debt payments down the road without fearing disruption by any unexpected expenses. How big should a rainy-day fund be? At a minimum, it should cover a couple of months of expenses, but ideally, it would cover three to six.

If you’re dealing with debt repayment difficulties, Access Credit Union might have a solution for you. Talk to one of our financial experts about your options and how you can move ahead with less financial stress.