Should You Pay Off Debt or Save for Retirement?

We all know it’s a good idea to save for retirement, and we also know it’s a good idea to pay off debt. Now both of these ideas are conflicting. If you save for retirement, how can you pay off your debt? If all of the extra money is going towards paying off your debt, how can you save for retirement? Yes, this is a real-life catch 22. However, this article will show you the answer to the question of whether you should focus more on saving for retirement or pay off all debt.

Are you ready for it? The answer is you should do both! Yes, I know how frustrating that can sound, because it translates into you having to do more work — but rest assured, that’s the truth. Answering whether you should pay off debt or save for retirement isn’t a matter of certainty. As with most things in life, finding balance is key. So a better question to ask is, “How can I pay off debt and save for retirement?”

Change Your Spending Habits

You have a tall order to fill: you have to figure out how to find balance between paying off debt and padding your savings. The very first step we need to take is examine spending habits. Frankly, you need to find ways where you can save more money.

You can start by recording your spending habits for a month. Record everything, literally everything that makes you pull out your wallet and spend your money. This includes those morning coffee trips and those quick, impromptu bites to eat with friends. It’s only when you record your spending habits that you can begin to look for ways to improve them. The goal is to identify areas where you can cut back.

Typically, most people will notice that they can save several hundred dollars per month by simply eating in more often. Additionally, moving your home into an area that’s more affordable is a great way to cut back on expenses. Get creative; consider life without the cable bill. Our goal is to save as much money as possible because we have to attack both debt and savings.

Start Paying Off Your Debt And Pay More Into Your Savings

You’ve made a lot of sacrifices at this point, but don’t stop! It’s now time to eliminate credit card debt so we can avoid debt settlement and also save for our retirement. Use the money that you saved and divide it between your debt and your savings.

For your debt, make sure that you pay above the minimum payment; the more money you pay, the quicker you can pay off your bills.

For your savings, make sure you put a consistent amount of money in each month so this becomes a habit. Once saving becomes a habit, you’ll be well down the road towards financial prosperity.

The truth is paying off your debt and also saving for your retirement is very hard but it isn’t impossible. If you can discipline yourself to manage your spending habits and increase earnings, you can do anything.