Are you torn between saving money and paying down debt?

While paying down debt is crucial for your financial health, saving money is equally—if not more—important.

Many people’s first instinct to paying off debt is to withdraw from their emergency fund, retirement fund, or other savings accounts. The logic behind this is that your debt is likely costing you more money every month than your savings is earning you.

However, this strategy could actually lead to more debt in the long run. Crazy, right? But, think about it—if you’re neglecting your savings account and using all your extra funds to pay off your loans, what will happen if an emergency comes up, such as unexpected car repairs, vet bills, or even job loss? 

We get it, life happens, but if you don’t have a savings account, you might find yourself in a difficult situation where you have to rely on your credit card to cover unexpected expenses. This can be frustrating, especially if you’ve been working hard to pay off your debts.

Breaking the cycle

1. The first step is to stop using your credit cards and adding to your debt.

2. Instead, set a realistic goal for your savings account that would cover most emergencies, such as $500.

3. While you’re building up your savings to reach that goal, make sure to pay at least the minimum payments on your loans.

4. Once you’ve reached your $500 savings goal, you can start dedicating more money to paying down your debt.

5. If an emergency comes up and you have to dip into your savings, don’t worry. Just switch back to paying the minimum on your debt and put any extra money into your savings to build it back up again.

By following these steps, you can build a safety net and get your finances under control.

Make savings a priority

Set up a specific but realistic goal. If you are receiving a tax refund this year, use part of that money to give yourself a head start. Use a savings goal calculator, such as Mid Oregon’s Savings Goals tool in Digital Banking, to see how much you’d have to save each month. Or, explore the variety of savings options Mid Oregon offers:

  • Share Certificates—Enjoy higher returns on your investments and keep your money safe and local. We have amazing rates right now so take advantage of our latest special.
  • High Yield Savings Accounts—Savings account with a variable dividend rate that increases as the balance increases (minimum balance $1,000).
  • IRA Accounts—Build your future and your nest egg faster with attractive rates of return and choices to fit every budget and savings goal. 
  • Saver’s Club Certificate—Set your goal and the amount you want to save every month. It’s ideal for saving for something special or not being caught short during the holidays.

Saving sufficiently for the future—whether that’s tomorrow or years from now—is crucial. From regular savings and high-yield savings accounts to share certificates, Mid Oregon offers a variety of savings options and strategies to cater to your unique needs. 

Don’t let the burden of debt get in the way of your savings goals. Mid Oregon is here to help you navigate through the complexities of managing your finances.