Why You Should Still Save When in Debt

Tin Can

Don’t actually save your money in a tin can.

The shackles of debt seem to be a bonding force for many millennials around the country, but it isn’t just Gen Y that is attempting to pay off lenders. Debt is a national problem spanning all generations. To many, it may feel nonsensical to save money while in debt, but it’s an important part of everyone’s financial health strategy.

You Still Need an Emergency Fund

Debt doesn’t preclude anyone from experiencing emergencies. Murphy’s law would suggest those already in the hole should expect more pain to pile on.

In fact, $1,000 surprises happen so regularly that Shannon McLay, a financial planner and author of “Train Your Way to Financial Fitness,” doesn’t even think people should consider them a surprise. The only twist is the type of emergency the money goes toward – perhaps your car, health care or education.

Personal finance experts differ on how much those in debt should have saved in an emergency fund, but they almost unanimously agree some disposable cash is a necessity.

Read the rest on US News’ My Money Blog

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14 comments on “Why You Should Still Save When in Debt
  1. Mario says:

    Lots of good points in there. It’s so important to remember that getting quick money for life’s unplanned but totally predictable emergencies can be very expensive when you’re not prepared. I also like that Shannon suggests forecasting out. Too many people get paralyzed by not knowing what lays down the road, but you estimate using all the information you have, then refine as the situation changes.
    Mario recently posted…Ten things you should always buy genericMy Profile

    • Broke Millennial says:

      Thanks, Mario. I like Shannon’s tips too and especially her point that $1000 emergencies should just be anticipated.

  2. Myles Money says:

    Unless you can guarantee that you won’t have any surprise bills, that you won’t get sick and that your job is 100% safe, then you need an emergency fund. We all do.
    Myles Money recently posted…The Financial Revolution Will Be Televised… on RealVision TVMy Profile

  3. Even Steven says:

    I think even beyond the emergency fund a small portion should be saved towards a 401K if you have a company match, it is such a great opportunity to pass up on 3-6% of your money.
    Even Steven recently posted…A Conversation You Are Dying to HearMy Profile

  4. Ahhh….this is great. My theory is you can stop saving when you are dead. That is when you won’t need it!
    Lance @ Healthy Wealthy Income recently posted…Oh No! The Stock Market is Going On SaleMy Profile

  5. I will always advocate for some kind of emergency fund. Life has a nasty little way of throwing curve balls at your right when you don’t have money available. It’s true…the Universe likes to teach us that lesson. 🙂
    Tonya@Budget and the Beach recently posted…What I Know About Myself and MoneyMy Profile

  6. Jason says:

    Really good advice here. I think that having one month of emergency savings initially is a good place to start and then paying down one’s debt. Although I must admit I save at least 20% of my what I make and I have a hefty amount of debt. I do it because of my age and for the tax benefits, but generally this is great advice. It is one of the things I disagree with Dave Ramsey about.
    Jason recently posted…I’m Not Getting OutMy Profile

    • Broke Millennial says:

      Ah, I disagree with the almighty Dave about a lot. But ignoring savings to just pay down debt just seems like a recipe for falling deeper into debt.

  7. Kassandra says:

    I was still saving in my retirement fund and maintained a small E-fund the entire time I was paying down debt. There was no way I was about to lose the company match by halting my retirement deductions!
    Kassandra recently posted…Making Good On My Investment – Part IMy Profile

  8. You, Matt, and Shannon have good advice! Ignoring an emergency fund or retirement savings is rarely a good idea. I also think that Shannon has a great point about the psychological benefits that stem from building up your savings while paying down debt. It always helps to have incremental goals and to see progress!

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