Your response to the COVID-19 pandemic may have altered your financial bigger picture in significant ways.
Your household may have gone from thriving on two incomes to just barely making it on one. You may have used high interest credit cards to pay off medical bills. Or maybe you’re just spending more on groceries and streaming services at the moment.
These all impact your need for cash on hand in order to feel financially secure. So then what?
The best time to prioritize saving money is if your savings account balance is too low for your risk tolerance.
But when is the best time to put extra money towards paying off debt?
First, you should always pay at least your minimum monthly debt obligations to protect your credit payment history. However, you’ll want to pay extra on debt that has a higher interest rate if your income is stable and your job is secure.
Not only will you gain peace of mind once that debt is paid off, but the decrease in monthly bills will feel like you just received some bonus income!
Bottom line: If you feel like your income is secure and you have enough saved to cover a crisis, then go ahead and pay off debt! Otherwise, focusing on savings is probably a better idea.