This is a question I get asked pretty often. My opinion? Yes, it's very possible to save and pay off debt at the same time however, you need a strategy in place to be able to do it successfully - Let me explain.
Here's how you can save and pay debt at the same time
Savings #1 - Emergency fund
When it comes to saving money and paying off debt, it's important that you have an emergency fund of at least $1000 to $1500 in place to start out. This will be your buffer in the event an emergency or an unplanned circumstance occurs (e.g. your car breaks down, you have an unexpected home repair or bill etc), this way you don't have to rely on credit or acquiring more debt to get yourself out of the situation.
Savings #2 - Retirement savings
Next, if your employer offers a retirement plan in which they match your contributions, contribute enough to get the full match a.k.a. the free money! If your employee doesn't match, contribute 5% to 10% anyway. If you are self employed open up an IRA and contribute a small amount to it e.g. 5% of your earnings.
By making these small contributions to your retirement accounts, you are ensuring that you are putting something towards your retirement and are able to take advantage of the power of compounding and the opportunity of time to invest.
Accumulating the amount of money you'll need in your retirement takes time. The more time you have, the more you'll be able to put away and the more time your money will have to grow.
Given the day and age that we live in, you cannot rely on social security to take care of you in retirement plus no one is going to be waiting to give you a beachfront mansion and a million dollars on the day you decide to retire. (Not sure how much you need to retire? Check out this post here)
If you are paying off debt, your focus will need to be on paying off your debt quickly but you still need to put something aside for retirement.
Once you have your emergency savings in place and have a plan to contribute towards your retirement savings, it's time to create a budget and become BFFs with it. Your budget will help you track your income and expenses and your goal with your budget is to keep your expenses as low as possible so you can get aggressive with your debt, starting with any high interest debt you might have.
Pick a debt repayment method and get to work knocking your debt down. The cost of debt in terms of interest you have to pay is not worth it and once you can knock it out, you can put the funds towards savings for other goals.
It's also important to adjust your mindset, remind yourself of your why and surround yourself with the right influences. This will keep you motivated to accomplishing your debt repayment goals.
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