Save Money BEFORE Attacking Debt

When we launched our “How To Have The Best Financial Year Of Your Life In 2014” live on-line event this year, I asked the question: “What is your top financial goal for 2014?”

The top response BY FAR was “I want to reduce/eliminate debt.”

It is a noble goal that will help create financial margin and reduce stress. However, many people make the mistake of skipping straight to debt reduction without first saving some money in an emergency fund.

This is a big mistake.

You see, we want to kill debt. We’re frustrated and angry and want to say goodbye to our long-time friend, Sallie Mae Student Loans, the banks, credit card companies, and stores. We want the debt to be G-O-N-E!

And we run right past a more important step – saving money.

Think about it. If you do not save money and begin to attack your debt with any and all extra money such as tax refunds, bonuses, and money freed up by better budgeting, you will begin to see your debt go down.

Then your car will break down.

How will you pay for it? Since you skipped the “saving money” step, you will have to use credit to pay for it.

This is demoralizing, and it causes many people to give up on their debt freedom march saying, “I just can’t seem to get ahead.”

Choose to save money first. I recommend $2,500 as a good start. Once all of the non-house, non-business debt is gone, build the savings to 3 months of expenses.

I’ll finish by sharing this: I’ve yet to meet anyone who told me, “We’ve just saved too much money. I regret it.”

Never. Met. That. Person.


  1. Jeff Plain on April 9, 2014 at 10:14 am

    Great advice as always Joe. When my wife decided to go to Law School, it meant selling the house and moving to Birmingham. We decided the best thing was to avoid the temptation of buying a new house and instead moved into a small 2 bedroom apt. That left us with a very nice savings fund, which was important since we were going from 2 incomes to 1 and I wanted her to not be stressed about money. Heck Law School brings enough stress!

    Murphy’s law kicked in and my company eliminated my position, but knowing we were in a solid position there was no panic in the job search which made our lives a whole lot better. Fortunately I was able to find work before my severance expired, and after she graduated we used that large savings for a down payment on a house in Huntsville, AL as well as cash flowing her 3rd year of school.

    We still have 3-6 months savings, and are hammering away at her student loans. Once that is down we’ll get back to focusing on retirement and paying off our mortgage.

    My goal is 2 more years for student loan and then 10 years for mortgage instead of the 30 the mortgage company wants.

    The plan works if you believe and put in the effort.

    Thanks for your ministry!

  2. Trish Crossley on April 9, 2014 at 12:20 pm

    Yes! Yes! & Yes!! This is such an important step to take when on the crusade to get out of debt! Savings protects us from running back to debt in the future.

    Thanks for this post! Homerun!!

  3. John Wernecke on May 5, 2014 at 6:42 pm

    I would whole heartedly agree. Murphy tends to be the killer in the plan to eliminate debt. The Emergency Fund is the critical key. We should teach our children how important this is for them as they begin to grow in their understanding of this culture where we are merchandized into spending what we don’t have to get things that break, things we don’t really need and things that become obsolete before we can pay for them. Invest in things which last and are necessary. Save for emergencies and invest in stuff that has eternal value, people, happiness and thanksgiving.
    Jolly John

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