Reaching your financial goals starts with a simple but powerful truth: saving money and paying down debt are both essential to long-term stability. Many experts will tell you to pay off debt first, especially high-interest credit card debt. And it’s true; interest on debt can grow faster than any savings account earns. But at Credit.org, our advice is more balanced. We believe you should always be saving something, even while tackling your debts.
Why? Because saving is a habit, not a one-time event. If you wait until your debts are completely gone, you may delay building wealth and be left unprepared when emergencies strike. More importantly, paying down debt is a form of saving. When you reduce what you owe, you’re creating future flexibility in your budget, cutting down interest payments, and strengthening your financial foundation.
America Saves Week is about more than just putting away a few extra dollars. It’s a nationwide effort to help people commit to better financial habits. Whether you’re saving money or reducing debt, you’re making progress toward financial security.
This week is also a great time to take the America Saves Pledge, make a public commitment, and get ongoing support. You can also use our San Diego Saves local campaign link; that encourages saving and smart money management.
Every dollar you put toward credit card debt or a car loan saves you money in the long run. Consider this: if your credit card has an interest rate of 20%, then paying off $1,000 saves you $200 per year in interest. That’s $200 you won’t spend and can instead use to build your emergency fund or reach other goals.
This is why America Saves reminds us that paying down debt is saving. Reducing what you owe lowers your monthly obligations, increases your available income, and builds your financial confidence.
It’s a mistake to think you must choose between saving and paying off debt. A stronger approach is to set dual goals:
The key is consistency. Our guide on The Difference Between Saving Money and Building Wealth explains how small, regular actions can lead to long-term financial health.
If you’re carrying balances on multiple cards, your interest charges may be eroding your ability to save. Review your credit card bill to see how much you’re paying in interest each month. Then do the math: how much of your payment actually reduces your balance?
That’s why it’s essential to pay more than the minimum whenever possible. Reducing your balance not only cuts interest costs but also improves your credit score, which can help you qualify for better financial tools in the future.
Learn more about strategies in 10 Tips of How to Get Out of Debt Fast.
While debt consolidation loans are often marketed as a quick fix, we don’t recommend using them. Consolidation loans require you to take on new debt; something that can make your situation worse if you’re not careful. These loans also tend to stretch out repayment timelines and may come with hidden fees.
At Credit.org, we believe that debt should be paid down using income, not assets. That means we don’t recommend using a home equity loan, retirement account, or inheritance to eliminate debt. Instead, we encourage structured repayment plans that work with your budget and don’t increase your risk.
A debt management plan (DMP) is one of the best alternatives to taking on new debt. Through a nonprofit credit counseling agency, you can:
Best of all, a DMP doesn’t require a new loan. You’re using your income—not new credit—to make progress. Learn more in our article on Debt Management vs Debt Settlement.
This is a common question, and the answer is: both. While your debt may carry high interest, having zero savings leaves you vulnerable. Without even a small emergency fund, any unexpected expense—like a car repair or medical bill—could send you deeper into debt.
Our take? Build a starter emergency fund of $500 to $1,000 while making regular debt payments. Once your highest-interest debt is reduced, grow your savings further. According to Experian, balancing these goals helps protect you from setbacks while keeping you on track. Use How to Start an Emergency Fund to Prevent Debt as a guide.
It may sound strange, but your savings account can actually help you stay on track with debt repayment. When you have even a small cushion, you’re less likely to rely on credit cards for unexpected expenses.
Set up automatic transfers—even small ones—to your savings account each payday. This builds discipline and reinforces the habit of saving alongside debt reduction. See our full guide on How to Manage Your Savings Account Effectively.
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It’s easy to separate debt and savings into two separate goals. But the truth is, they’re connected, and the same actions that help you pay off debt can also help you build wealth.
When you reduce what you owe, you lower your interest payments and increase your future income. That’s money you’ll no longer have to spend on credit card bills, which frees you to direct more of your paycheck toward real savings. This shift in mindset—seeing debt repayment as a form of saving—can help you stay motivated.
You’re not just paying bills; you’re creating room in your budget to grow.
To keep your goals in balance, create a budget that includes both:
As your debts shrink, redirect those freed-up dollars into your savings account. Think of it as a natural progression: debt payments go down, savings contributions go up.
This “double progress” keeps you moving forward no matter how small the initial amounts.
If you’re unsure how to begin or feel overwhelmed, credit counseling can help. A certified counselor will:
These services are typically free and provided by nonprofit agencies. Read more about Credit Counseling to understand how it works and what to expect.
Some people consider borrowing from a retirement account or using home equity to eliminate debt. But this approach is risky. You’re exchanging future security or essential shelter for short-term relief.
We strongly advise against it. Instead of using your assets, we recommend using your income—supported by a smart budget and a debt management plan—to reduce what you owe. This protects your long-term stability and avoids trading one form of risk for another.
Here are some proven ways to speed up your progress:
You can find additional tips in 10 Tips of How to Get Out of Debt Fast.
A debt management plan is the preferred method for people who want a structured repayment path without borrowing more. DMPs allow you to consolidate your credit card payments through a nonprofit counseling organization, often at reduced interest rates.
This method is far safer than a debt consolidation loan, which requires you to take on new debt and potentially puts your assets at risk. You don’t need a loan to get your finances under control; you need a plan, support, and consistent payments.
Working with a nonprofit counseling organization is a powerful way to stay accountable. These agencies offer:
They also help you avoid high-risk strategies like payday loans, balance transfers with hidden fees, or untrustworthy settlement companies. You get progress without the pressure.
If you don’t have emergency savings, any unexpected expense can throw off your entire debt repayment plan. That’s why building even a small emergency fund is critical; it protects your progress.
A broken water heater, vet bill, or flat tire shouldn’t push you back into debt. By building up your savings alongside your payments, you create a financial buffer. Refer to How to Start an Emergency Fund to Prevent Debt for guidance.
If your credit card bill has gotten too large to handle, don’t ignore it. Instead:
Even if you can’t pay it all off at once, small, consistent payments will make a difference. Paying down that card is saving; it’s future interest you won’t have to pay.
A savings account does more than hold your money; it protects your goals. Whether you’re building an emergency fund, saving for a big purchase, or just setting aside money for peace of mind, it’s part of a strong financial plan.
Don’t wait until you’re debt-free to open a savings account. Do both. Start with small automatic transfers and increase the amount as you make progress with your debts.
Learn more in How to Manage Your Savings Account Effectively.
If you focus only on paying off debt, you miss out on building the savings habit. That habit is what protects you in the future. At the same time, if you ignore your debt, interest charges will pile up and eat into your income.
So the answer isn’t either/or. It’s both.
That’s how you build momentum toward financial health. You can explore this idea further with Investopedia’s breakdown of saving vs. paying off debt.
Debt repayment and saving are long journeys, but every step counts. Did you pay off a credit card? Skip eating out for a week and save $50? Make an extra payment toward your car loan?
Celebrate it.
Use this motivation to stay on track and take the America Saves Pledge. You can also participate in San Diego Saves and connect with others who are working toward the same financial goals.
Once you’ve started to reduce your debt, it’s tempting to reward yourself with new purchases or rely on credit when things get tight. This can erase your progress.
Instead, protect the gains you’ve made by:
This way, each payment moves you forward, not back.
It’s important to review your plan regularly. Set reminders each month to:
Staying active with your money choices builds confidence and keeps you moving forward. And if life throws a curveball, you’ll be ready to respond with clarity instead of panic.
If you’ve fallen behind on bills, you may hear from a debt collector. Don’t ignore the call. You have rights and options.
Here’s what to do:
With support, you can create a realistic plan to address these debts without falling further behind on your savings or primary bills.
A car loan is a secured debt, which means if you stop making payments, you could lose your vehicle. That’s why it should be a top priority in your budget.
But it’s also a place where you may be able to make progress faster by:
Treat your car loan like any other major debt: track it, pay it on time, and look for opportunities to pay it down faster.
Debt relief scams and fast-fix programs often promise too much. Watch out for:
If it sounds too good to be true, it probably is. Instead, work with a nonprofit credit counseling agency that will prioritize your financial well-being; not their profits. Learn more in How to Know if a Credit Counseling Agency is Legitimate.
Your financial goals aren’t just about dollars. They’re about security, peace of mind, and freedom. Whether your goal is to:
…you can get there by consistently saving and reducing debt at the same time.
Revisit your goals during America Saves Week, and adjust them as needed. Life changes; your plan should too.
When you build both your savings and reduce your debt, you create financial resilience. You stop relying on credit cards to cover emergencies. You protect your future. You build confidence.
And best of all, you prove to yourself that progress is possible, even if it starts small.
Your financial journey doesn’t have to follow a one-size-fits-all approach. Whether you’re trying to avoid high fees on your credit card balances, lower your interest rate, or manage one monthly payment, the best strategy is the one that fits your lifestyle and financial goals.
A good personalized plan will always include both savings and debt reduction, because real progress happens when you take care of both. Avoid falling into more debt by preparing for unexpected expenses and sticking to a consistent payment schedule. Even if you’re juggling large debts or struggling with day to day money decisions, you are not alone.
A certified credit counselor can help you develop a plan that prioritizes your needs, protects your income, and strengthens your savings habit. If you’re facing financial trouble, trouble paying your monthly bills, or dealing with a home equity line you no longer feel comfortable with, now’s the time to act.
Contact us at Credit.org today. Our nonprofit team can help you build a realistic budget, create a debt repayment plan, and stay on track, so you can save more, reduce stress, and take back control of your financial situation.
