How to Save Money AND Pay Down Debt

I am often asked the question “Is it better to pay off my debt before I start saving?” The answer I usually give, is “Why not do both?” – which is usually met with perplexed looks from my clients. The truth is, it IS possible to pay down your debt AND save money at the same time, which is important because savings for things like retirement will build faster over the longer period you give yourself thanks to the beauty of compound interest.

For example, if you start saving just $25 per week at age 30, and earn an average of 6.0% per year, you will accumulate a little over $151,000 by the time you’re 65. If you wait until you’re 40, that amount drops to just over $75,000 or about half. Waiting until age 50 will only leave you with about $32,600. To get the same $151,000 by age 65, at 40 years old you would have to DOUBLE the amount per month you put in ($2,400), and if you wait until age 50? You will need to contribute over 4 TIMES as much just to catch up ($5,550). So not only is it important to pay down your debt, but it’s vital for your overall savings to begin early and let your money work for you with compound interest.

So how do you set yourself up to be able to do both? Let’s look at some strategies:



First and foremost, when looking at paying down debt and/or saving money, the Number 1 thing you absolutely MUST do is get organized. That means you must figure out every penny that comes in and out of your financial home.

Most everyone knows what their income is, and when those payments come in – but how many of you know EXACTLY how much you’re spending per month? I’m talking down to the Cup of Dunkin’ Donuts coffee that you buy. Not so much, eh? It’s not surprising and you’re not alone:

  • Studies have shown that 61% – that’s SIXTY ONE PERCENT – of US Adults don’t keep track of their money1
  • 1 in 3 people spend more money on COFFEE than they invest2
  • HALF of Americans are spending their ENTIRE paycheck – or MORE3

Getting organized may take some work, but it is VITAL to the process of ever getting out of Debt and saving money – and once it’s done you will be more in control of your finances and ready to move forward with a plan. There are several tools you can utilize to help you get this information together. Whether it be pen & paper, spreadsheets, or using an online budget tool like YNAB ( or Mint (, it doesn’t matter. What matters is finding what works best for YOU and then getting the information together and in front of you, so you can….



That’s right, it’s the dreaded B word. Time to do some “adulting” at its finest. For best results, set up your budget to track and account for EVERY dollar that comes in and goes out. Now just to clarify any confusion with that statement, let me make this very clear: THAT DOES NOT MEAN YOU SPEND EVERY DOLLAR THAT COMES IN – you just account for it and track it. If it stays in the account it was deposited into, track it there. If you take cash out while depositing a check, account for it. If you have your mortgage set up on auto-payments, track the funds coming in to cover it, then account for those funds paying that within your budget.

A few tips when budgeting:

  • Round up to the nearest $10. If your car payment is $353.45, set it for $360. If your cell phone bill is $87, set it for $90, etc.
  • Try to get “variable” bills such as Utilities on a budget plan. Most Utility companies have plans and will work with you. Plus, it will help provide for a more predictable monthly expense with its consistency each month – and help take some of the “bite” out of the higher bills in the winter months.
  • Take a REAL look at your food and grocery bills from the past few months to come up with a viable solution for a budget figure for this expense. If you’re trying to save money and pay down debt, some of those restaurant expenses must go (see Cutting Expenses below) and will need to be replaced with food you cook at home.

Something that helps is to allocate ONE account for money to go into and cover your monthly expenses. Leave enough money in there to cover those expenses for the month plus a small “buffer”. (You can set your own buffer based on your comfort level or bank requirement for minimums) Any other funds should either be moved out into separate accounts or deposited into those separate accounts directly. Doing it this way helps you to focus on your budget one month at a time and NOT spend any extra money from the expense account without having to transfer or move funds. Forcing that extra step helps prevent you from “frivolous” spending that is not budgeted – or going over budget with things like groceries, eating out, etc.

Your separate accounts can be used for things like setting up your emergency fund, setting aside funds to “Snowball” debt payments to help pay them down faster, saving for a family vacation, setting aside funds for house/car/appliance repairs, contributing to your IRA or Roth IRA, and so on. You can either allocate one account for this (except for your IRA contributions) and keep a separate spreadsheet with the breakdown of what funds are allocated to what “sub-account”, or you can keep several different accounts – the choice is yours and what you are comfortable with keeping track of.

One last word on the Expense Account: Take a look at your account balance every few months. If you have accumulated extra funds within that expense account over the “buffer” you keep in there, Good for you! That means you’re not only working within your budget but coming in below budget! Now MOVE those funds out of the expense account and into one or more of your earmarked savings accounts.



Let’s face it – if you really want to get out of debt and save money, you NEED to see where you can trim some expenses. Some sacrifices may need to be made to get spending in control and get out of debt. Here are some ideas to help get you going:

  • Cut Cable – switching from Cable or Satellite may be hard to do, however with going rates between $100-200 per month this is a big one. Many people have cut the cord and switched over to things like Roku or Fire Stick, or subscriptions to Netflix or Hulu. You don’t have to give up your favorite shows – just find a less expensive way to watch them.
  • Review Your Cell Plan – Having unlimited data is great, but are you REALLY using that much? Is there a less expensive plan that may work for your usage? Depending on your overall cellular usage, Pre-paid options are also available AND allow you to transfer your number.
  • Reoccurring deductions from accounts – By a show of hands, how many of you have a gym membership you pay for every month that you don’t use? How about supplements or make-up or any other kind of reoccurring charge you signed up for, now have stopped using, but still get charged for every month? WHY ARE YOU STILL PAYING FOR THESE? Cancel them and immediate save money!
  • Eat IN, not OUT – Yes, it’s great not to have to cook after a long day of working but those take-out dinners and those after work Happy Hour Cocktails are killing your budget. Save your dining out for special occasions, or a monthly meet-up with friends.
  • Make your own Coffee and Breakfast – I understand how difficult it can be to give up your triple-mocha-pumpkin-spice-half-caff-with-splenda-and-doublewhip-latte and specialty low-fat blueberry muffin, but that’s costing you anywhere from $25-50 PER WEEK. Taking your own coffee and fresh grocery bakery (or homemade!) muffin from home can be just as good for pennies on the dollar.
  • Coupon! – You don’t have to do extreme couponing to save on anything from groceries to school supplies, clothes, and even that monthly dinner out! You can find coupons online and find great deals for restaurants and activities on Groupon. Every little bit adds up and stretches your dollar (and your budget) more.
  • Discount Gift Cards – Many stores like BJ’s, Costco, Sam’s Club, and even WalMart offer a discount when purchasing gift cards. For example, a $100 gift card to your favorite grocery store might only cost you $75-90. You can buy the gift card, then use that towards your grocery bill and get an immediate savings of 10-25% for something you will use anyway. With more places offering gift cards now, always check the Gift Card Kiosk at your stores to find some great deals.
  • Energy Saving Devices – If you own a home, things like energy saving thermostats and tankless water heaters are worth the investment because of the overall savings to your wallet on your energy bills. Some companies even offer discounts or incentives to make the switch.
  • Get smarter on Vacations – Compare prices and opt to drive instead of fly if its cheaper. Book and Air BNB instead of a hotel for not only a little more room, but a full kitchen so you don’t have to eat out every meal while you’re away from home. If you do fly, keep an eye on flight prices once you book. Some airlines like Southwest will give you flight credit if you re-price your same tickets and find that they’re cheaper. (Many times, they must be used within a year, but this is a great perk for those that may travel for business or to see family several times a year)


OK, so we’ve gotten organized, budgeted, and trimmed expenses. What if that isn’t enough and you’re a little over stretched – or want to save more and snowball some of your debt to get it paid off quicker? Then you need more income. There are several ways you can add income to your monthly budget. Here’s a handful:

  • Get a second job – The first, obvious choice that many people face is needing a second job to help make ends meet. It’s unfortunate for some, but necessary.
  • Side Jobs – do you have a craft or skill that others may be willing to pay you for? Anything from home repair to alterations, mechanic skills to mowing lawns, picking up some side-jobs are a great way to earn some extra money AND work within your ow schedule (unlike a second job where you’re on a set schedule with your extra employer) Just keep in mind that these side-jobs are considered Self-Employment income and Uncle Sam will still want his cut.
  • Crafting & Selling – the same idea of a Side-Job; if you have a skill to make things others will want to purchase, you have put your hobby to work for you to earn a little extra money. Craft Fairs or selling online are great ways to show off your work.
  • Find money in your own Closet – This is a great way not only to de-clutter your home, but to make a little money while doing it. With so many online Sites available to you like eBay, LetGo, and even Facebook Garage Sale pages, you don’t even have to set up your own garage sale at home, just snap a picture as you go through your things, upload and set your asking price. Of course, you can still also use the traditional avenues like a home or neighborhood garage sale or consignment shops.
  • Babysitting/Respite – If you like kids or helping with Special Needs or families that care for the elderly, this is a great option. A way to do good for someone that desperately needs a break – all while making a little money as well.
  • Dog Walking/Sitting Services – Maybe your more of a pet lover than a people lover? No worries, there is a money-making opportunity for you as well. Same as Babysitting/Respite, but with pets.
  • Tutoring – If you are proficient in a subject or two, offering your services to tutor others to master the subject can be a quick and easy money maker.
  • Cleaning – If you’re one that likes to clean, you can offer your services on the same Garage Sale sites and make a little extra money while helping a busy family,
  • Become an Uber/Lyft driver – Like to drive and have a reliable car? You can make a good amount of money working as an Uber or Lyft driver – and set your own schedule around your full-time job.


Some final thoughts: only YOU can get yourself and your family on the right path. Beginning this journey to financial well-being will take some work, but once you get going you will feel more in control over your finances and find yourself out of debt with money saved. You CAN do this!

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