Save or pay off debt? Here’s what to consider

If you feel like debt is weighing you down, but you want to build up some savings, too, you’re not alone. Our quarterly Consumer Pulse shows that, despite challenges to household budgets, some people have been able save more in their emergency funds (savings they’re stashing away for a rainy day) in the previous three months. But at the same time, others had to dip into savings to pay their bills. Because everyone’s finances are different, when it comes to managing your savings and debt, there’s no universal strategy that works best for everyone.

If you have debt, and are motivated to build a savings account at the same time, a balanced approach can work. In other words, you don’t need to decide whether to save or pay off debt. Below are things to keep in mind as you make your plan.

Know where you stand

Start by identifying exactly how much debt you have. If you’re having trouble keeping track of all your credit accounts, getting your credit report may be an easy way to see them all at once. In your credit report, you’ll see information like the terms, payment history and balance for each account. Lenders tend to provide account updates monthly so it may take some time for the information to be updated on your report.

 

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