6 Expert Tips for Managing Debt & Having Good Financial Health

Quick Answer: Managing debt and balancing savings is crucial for financial health. Start by tackling high-interest debt, building an emergency fund, and contributing to retirement. Once that foundation is set, focus on lower-interest debt and short-term goals.

Managing debt - Clark County Credit Union in Las Vegas, NV

Achieving financial stability involves managing both debt and savings strategically. You don’t have to choose one over the other—you can do both! Here are six expert tips to help you manage debt while growing your savings.

  1. Pay Down High-Interest Debt First
    High-interest debt, like credit cards, can severely damage your finances. Paying off these debts should be a priority since the interest far exceeds what you’d earn from a typical savings account. Eliminating high-interest debt frees up cash and can also improve your credit score.
  2. Build an Emergency Fund
    Before diving into long-term savings, create a safety net for emergencies. Aim to save at least three to six months of living expenses. Start small—even $500 can make a difference when unexpected costs arise.
  3. Contribute to Retirement Savings
    Once your emergency fund is secure, focus on retirement. Take advantage of employer-sponsored plans like a 401(k), especially if matching contributions are offered. If no employer plan is available, consider a traditional or Roth IRA. The sooner you start, the more your savings will grow.
  4. Tackle Lower-Interest Debt
    After handling high-interest debt, focus on lower-interest debts like car loans or student loans. While they’re less financially draining, paying them off early can still save money on interest and free up funds for savings.
  5. Set Short-Term Savings Goals
    Set aside money for short-term goals like a vacation or a new car. Automating contributions to a separate savings account can help you reach these goals without affecting your overall financial plan.
  6. Save for Education
    If you’re planning for your children’s future education, consider a 529 education savings plan. These tax-advantaged accounts allow your savings to grow, and withdrawals are tax-free when used for qualified education expenses. You can learn more from a 529 expert on the credit union’s podcast episode here.

Finding the Right Balance

Balancing debt management and savings is essential for long-term financial health. Create a plan that works for you, prioritizing immediate needs while keeping an eye on future goals. Don’t hesitate to seek advice from a financial expert to refine your strategy.

At CCCU, we’re here to support you in reaching your financial goals! Call us at 702-228-2228 or visit www.CCCULV.org to learn more and start on the path to debt management.