131 - Balancing debt payoff with savings
On this episode, I chat with my guest Keila Hill-Trawick about balancing debt payments with saving for an emergency fund and and saving for retirement.
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In my alumni group we recently read money philosophy "I Will Teach You to be Rich" by Ramit Sethi for our quarterly book club. On the topic of money philosophy today's question is a hypothetical one.
"If you're starting from scratch saving money and paying debt, how would you prioirtize between 1) building an emergency fund of around $3,000, 2) paying your quarterly taxes, 3) saving your first few thousand dollars toward retirement and 4) paying down about $3,000 in high-interest consumer debt? Do you do them all at the same time or in a certain order?"
Keila shares her insight that it's what makes you feel safe. If you feel scarce, then you're automatically going to want to prioritize putting money in savings. For example, if you start with retirement but you're struggling with savings, it's going to make it hard to put money away for retirement. Some people prefer savings so they have cash if something happens, other prefer to pay off debt so they feel the money they have it theirs. Work on paying debt while also saving at the same time. Remember that tax money isn't yours so factor that into your pricing so you can immediately remove it and never feel like it belongs to you.
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Keila Hill-Trawick, founder of Little Fish Accounting
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