This page uses JavaScript. Your browser either does not support JavaScript or you have it turned off. To see this page properly please use a JavaScript enabled browser.
Members First CU of Florida Go to main content

We will be closed on Monday, May 27, in observance of Memorial Day. You can access your account anytime, anywhere, with Internet Banking and on our mobile banking app.

Become A Member Apply for a Loan Branches ATMs
Home > Should You Save First or Pay Off Debt?
Should You Save First or Pay Off Debt?9/22/2022

woman writing in notebook and working on laptop

You've built a budget or made adjustments to your existing budget, cut expenses, and now have extra cash each month that you can contribute towards savings or paying down debt. Should you put your extra funds towards savings or paying off debt? The right answer depends on your situation and financial goals. To help you make the right decision for you, consider the following:

Do you have an emergency fund?

It's important for you and your peace of mind to have a financial cushion set aside in case of unexpected expenses. If you lose your job, need a car repair, or have a medical emergency, you'll be prepared with an emergency savings. Start with a small amount of money and build from there. 

Tip: Pay yourself first — have a portion of your paycheck deposited directly to your emergency savings account.


Do you have a retirement savings account?

Even if retirement is a long way off, open a retirement account, like an Individual Retirement Account (IRA). It's okay if you can only contribute a small amount initially. Because of the magic of compounding interest, the sooner you start saving for retirement the better off your financial situation will be when it's time to retire. 

How much debt do you have?

Once you've established an emergency fund and started saving for retirement, it'll be easier to focus on debt management. Start by writing down each debt and the interest rate that you're paying.

Example:

Account

Amount Owed

Interest Rate

 

Credit Card 1

$1,865.50

17.99%

 

Credit Card 2

$756.90

12.9%

 

Auto Loan

$9,092.56

3.99%

Once you've totaled up your debts, choose a repayment strategy to pay off your debt. Popular debt repayment strategies include: 

  • The Snowball Method: Arrange your debts in order from smallest balance to largest and focus on making payments on the account with the smallest balance.
  • The Avalanche Method: Arrange your debts in order from highest interest rate to lowest and focus on making payments on the account with the highest interest rate.

With the Snowball and Avalanche method, you'll still make all your minimum payments, but add extra funds to your payment for the debt with either the smallest balance or highest interest rate, depending on which repayment strategy you're using.

Tip: To help you save on interest while you're paying off lenders, see if you qualify for a balance transfer or debt consolidation loan.

Balance Transfer

credit card balance transfer icon

Transfer your high-interest balances to Member First Credit Union of Florida's low-interest credit card. 

Learn More or Apply

Debt Consolidation

debt consolidation transfer icon

Roll multiple debts into a single, low monthly payment.

Learn More or Apply


 



How Useful Did You Find This Information?

Let Us Know

Powered by Delighted.

 



 

RESOURCES

 

 



« Return to "Blog" Go to main navigation
I Want To
I Want To
Loan Center
Loan Center
Credit Cards
Credit Cards
Careers
Careers
Special Offers
Special Offers
Members First CU of Florida
InstagramTwitterfacebookemailWordpressYouTube
NMLS #405711
Equal Housing Lender National Credit Union Administration
This Credit Union is federally-insured by the National Credit Union Administration. We do business in accordance with the Fair Housing Law and Equal Opportunity Credit Act.
Members First Credit Union of Florida is not affiliated with Members First Credit Union (Kentucky)

Members First Credit Union of FL is committed to providing a website that is accessible to the widest possible audience in accordance with ADA standards and guidelines. If you are using a screen reader or other auxiliary aid and are having problems using this website, please contact us at 877-434-6328. We are actively working to increase accessibility and usability of our website to everyone. All products and services available on this website are available at all Members First Credit Union of FL branches.

 

Any external links or websites to alternative sites are not operated by Members First Credit Union of FL. We are not responsible for the content of the alternate site or their accessibility standards.

BACK TO TOP