Debt reduction or savings? How to balance the two.

Debt reduction can be difficult when also trying to maintain an emergency savings fund. How to save and work towards debt reduction simultaneously, and other money tips from everyday people. 

By , Guest blogger

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    An Indian counts dollar bills at a foreign exchange shop in New Delhi. It can be tempting to take debt reduction slowly in favor of building up emergency savings, but one advice-giver argues that just leads to a false sense of security.
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NerdWallet’s How Do You Do Money? series asks people from various walks of life to share their attitudes and approach to personal finance, with the goal of bringing transparency to discussions surrounding money issues like debt reduction and retirement savings.  This feature is special, instead of an interview with one individual, we’ve highlighted 15 tips from everyday people about how they approach personal finance.

1) “I’m a lot more conscious of making sure my living expenses don’t outstrip my income. I try to live on my last month’s pay, which helps when unexpected things crop up. They always do.” -Andrew

2) “I really do believe that the amount of money you do or don’t have affects how you approach it. If there’s not a lot of it, I think it’s wise to address that. If there is a lot of it, that’s an entirely different story.” -Megan

Recommended: Can you manage your money? A personal finance quiz.

3) “I practice the philosophy ‘use it up, wear it out, make it do or do without.’ I live a fairly minimal life and I try not to buy stuff I don’t need.” -Nicole 

4) “I do not hold money in high regards now that I am in a position to do so. The materialistic things … are not goals. They are not why I work. They are a product of my work and something which I accept and embrace. But they are not the goal. My goal is to achieve something great and change the world.” -Kelly

5) “Together, my wife and I make about $55K.  We feel pretty secure where we are because of how we budget, but we just made a ‘dream’ budget recently. We went line by line in our current budget and said, ‘What would be a really comfortable number here?’ We didn’t go too crazy with anything. Before taxes we would need to make $106K.” -Austin

6) “I am attempting to cap my Roth IRA contributions every year. I made my $5.5K goal last year, and I intend to do the same this year.” -Chase

7) “When I first left home, I worked and was frugal, and things went well for me and I was happy. Then, as mentioned, I fell into a period of aspiring to an upper-middle-class lifestyle that I just couldn’t afford. Now I’m pretty much back to how I was initially.” -Josh

8) “You don’t realize how quickly money goes until there’s none of it coming in.” -Andrew

9) “One thing I’ve struggled with is the balance between paying off your outstanding debts and keeping a chunk of money on hand as an emergency fund. There’s a false sense of security when you keep your savings account padded but you’re only paying the minimum amount required on your monthly debts. You’ll save more in the long run by paying things off early, but it can be painful and scary doing that.” -April

10) “One of the greatest problems faced by young people in the workforce is that traditional businesses, retail banking in my case, have yet to take into account student debt when setting price points for hiring new employees. They prioritize hiring people with degrees but continue to use wages designed to meet the needs of someone with a high school diploma and no appreciable debt.” -Evan

11) “The trouble is that what I really want to do is both support myself and pay off all my debt RIGHT NOW. So that makes me feel financially insecure. If all my debt were wiped away but I earned the same amount of money, I would feel financially secure.” -Nicole

12) “When I was in debt, I always paid at least the minimums, if not more, and I have an excellent credit score to show for it.” -Cait

13) “I got myself into trouble with credit cards and personal loans when I was younger and paid more in interest than what I actually spent the money on in the first place. I kept track of the interest, and looking at that number and knowing I could have saved it or invested it is what I regret most.” -Andrew

14) “As an adult I’ve tried to be more open about money because I’ve realized that being totally opaque can needlessly complicate your life.” -Evan

15) “I think that it’s perfectly fine and wonderful and necessary to talk openly and frankly about money, because it’s a problem that every single person has.” -Megan

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