Debt vs. savings
This one feels like it should be simple — debt is expensive, so kill it first, right? Mostly, but there's a specific exception that trips a lot of people up.
Even if you're carrying high-interest debt, put a small emergency fund together first — somewhere around $1,000, or one month of essential expenses. Here's why: without any cushion, the next surprise expense (a car repair, a medical bill) goes straight back onto a credit card. You end up paying down debt with one hand and rebuilding it with the other, which is worse than either extreme on its own.
The order that actually works: a starter cushion (~$1,000) first, then aggressive debt payoff, then building the cushion up to a full 3–6 months of expenses once the high-interest debt is gone.
Because while you're slowly saving up 3–6 months of expenses at a savings-account interest rate, high-interest debt keeps compounding against you the whole time. A starter cushion protects you from the most common shocks; the rest of your money is better spent shutting down debt that's actively costing you more than any savings account pays.
If your job or income is unstable — commission-based, gig work, a company you're worried about — lean toward a bigger cushion before going hard on debt. An unpredictable income makes a thin safety net riskier than it looks on paper.
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