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Deciding whether to save or pay off debt isn’t an easy choice — in fact, it’s highly contested.
On one side, financial experts argue that you can and should do both at the same time. “Delaying your start date for years because you’re focused on debt can have serious long-term repercussions. The rest of your life isn’t ‘all or nothing,’ and your money doesn’t have to be either,” Erin Lowry, author of the “Broke Millennial” book series, recently wrote.
On the other side, pausing investments to focus on debt worked out for Bernadette Joy, a financial coach and founder of Crush Your Money Goals, who paid off $300,000 in debt using this strategy and others.
Combined, saving money and paying off debt will get you to financial freedom — or at least financial stability. But inevitably, one will have to be prioritized over the other.
To get a sense of how individual financial needs can be prioritized, we put five hypothetical money scenarios into the quiz below. See how many you can get right.
In almost every situation, we recommend paying at least the minimum required payment to your lenders. And it’s important to remember that there isn’t one correct approach to money management. If you would like personalized guidance on how to pay down your debt, we recommend making an appointment with a nonprofit credit counseling organization.