What is the point we are all striving for? Ideally, most people would like to reach some sort of place where they no longer have to work in order to live comfortably and without financial strain. But how is this possible? Through saving money, of course, but how do people manage to save money while simultaneously dealing with every day expenses and digging their way to get out of debt?

The answer is balance. By prioritizing and balancing debt and savings, it is possible to come out victorious in both categories. Here are a few measures and assessments you can make when handling both debt and savings all at once.

Saving and Getting Out of Debt- Emergency Fund

The first step is to build up an emergency fund. An emergency fund is the most important measure you can take to help both savings and debt. This may seem counterproductive to begin saving money when you still have debt to pay back, but an emergency fund can prevent that debt from growing and can guard you against a debt trap. Basically, an emergency fund protects you against life’s sudden disasters such as job loss or unexpected medical expenses. If these events come along and you are without an emergency fund, your manageable debt becomes unmanageable rather quickly.

Save and Get Out of Debt

401(k) Match

Once an emergency fund is built, the next logical step is to begin saving in your 401(k) and making the maximum contribution that your employer will match.

This is free money. It should be taken advantage of. But be careful to not be too enticed and forgo the first step of building an emergency fund. Yes it’s tempting because you seem to be making more money, but taking from your 401(k) too early can have penalties that can affect you for much longer.


After building an emergency fund and taking advantage of your 401(k) match, it’s time to begin the balancing act. Set priorities. Debt should be this priority. But to be sure, ask yourself the following questions:

  • How Close Are You to Retirement? The closer you get to the age of retirement, the higher priority saving will be. Balance this against your debt payments and hit your retirement savings mark.
  • What Kind of Debt Do You Have? Add up all your debt and examine your interest rates carefully. Low or zero interest rates, like many car loans, can be pushed to the side. Higher interest rates, however, only build more debt and getting out of debt should be prioritized.
  • What Does Your Credit Look Like? If your credit score is low, prioritize getting out of debt. It will improve your credit score and make saving a much easier task in the future.

Related: Who has America’s Debt?