Money experts at Consumer Reports say it's important to find the right balance. It's difficult to tackle several financial goals at once, but if you take a multiple approach, you can save for retirement and pay down your debt at the same time.
Start by taking a good hard look at where your money is going. Several online tools can help you track your spending, including the free one at Mint.com, and YNAB (short for You Need a Budget), which costs $84 a year.
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Then look for ways to free up cash. You'll have the biggest impact with big-ticket items such as housing or transportation.
But small fixes, like making coffee yourself or cooking at home, can also add up over time.
Next, prioritize your debt by tackling the high interest credit cards first, followed by lower interest debt, like student loans. And set up automatic payments so that you won't have to remember to send the money each month.
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At the same time, slide even a small amount into a rainy day fund for unexpected medical bills or car repairs.
And continue to feed a retirement plan. If you have access to one at work, opt in! People who do are 12 times more likely to save for retirement.
It isn't always easy, but balancing debt against savings is the right call.
Consumer Reports says it's important to remember that people with hefty amounts of debt need to be patient, stay the course, and remember that it's a long-term plan. The younger you are when you start to save, the better off you'll be in the long run.
All Consumer Reports material Copyright 2020 Consumer Reports, Inc. ALL RIGHTS RESERVED. Consumer Reports is a not-for-profit organization which accepts no advertising. It has no commercial relationship with any advertiser or sponsor on this site. For more information visit ConsumerReports.org.
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