We all know we should save money, but the issue is muddled once debt gets involved. Given that we may never out-save or out-invest our debt, is it wiser to focus on paying off all our debt before we start saving? The answer is “it depends”. Here are some solutions to different scenarios:
The first rule: Always save at least a little bit
Even if your main objective is to pay off debt first, always save a little bit. This is because you need access to funds during an emergency, and failing to do so can trap you in a cycle of debt.
For example, say you spend practically all of your disposable income on making huge loan repayments. You barely have enough to live on and don’t have any savings at all.
What happens if a crisis strikes and you need medical care? Or you lose your laptop and can’t ......