How To Balance Multiple Financial Goals When You’re In Debt


balance multiple financial goalsIf you’re reading this, chances are that you are in debt. And if you done much reading in the personal finance space, you probably know that the first thing you’re supposed to do to get your financial house in order is pay off your debt as quickly as possible.

Some people are even “gazelle intense” about paying off debt after listening to or reading financial advice from guru Dave Ramsey. While I think that’s great and I know it works wonderfully for some people, it’s not the approach I’ve taken with my debt.

Instead, I’ve decided to balance multiple financial goals at the same time.

I’ve been paying off debt, building my emergency fund, investing for retirement, and I even quit my job to become self-employed part-way through my financial journey. Yes, this means the progress in all of these financial areas is slower than if I worked on them one at a time, but this is what works for me.

Here are some tips I’ve found helpful for balancing multiple financial goals when you’re in debt.

Building An Emergency Fund

Even Dave Ramsey is on-board with building an emergency fund when you’re in debt. In fact, this is step number one in his seven “baby step” plan.

While he suggests that you only build a mini-emergency fund of about $1,000 before focusing 100% on your debt, I’ve found that I feel more secure with a little bit extra in my emergency fund.

I’m currently at about $1,600 and counting and I plan to continue contributing a small amount to my emergency fund each month that I’m in debt. Saving every month is also a good habit to build so you can continue with larger amounts once your debt is paid off.

Investing For Retirement

This is a pretty controversial point for people who are in debt and advice from experts is split on whether or not you should stop contributing to your retirement account when you are in debt. But really, it depends on your personal situation.

In general, I think you should continue investing for retirement while simultaneously paying off debt if you are earning an employer match on your retirement contributions. An employer match gives you a 100% return on your investment if your employer matches you dollar-for-dollar. You can’t get a ROI like that anywhere else.

Before you decide to continue your retirement contributions, make sure you consider your personal situation. If you’d only have to stop contributions for a few months in order to be debt free, it might be worth it.

Maintaining Your Possessions

If you’re in “gazelle intense” debt payoff mode, it might be tempting to save some money by skipping things you’d normally pay for to keep your possessions in top-notch conditions. If you decide to skip some maintenance activities to save that money for debt, make sure you’re smart about it. See if you can do things a little less often than before, or try DIY-ing them to save money.

For instance, you can learn to change the oil in your car with only a few tools that’ll pay for themselves after a short period of time. If you’ve paid someone else to clean your house’s gutters in the past, get a ladder and do it yourself.

Investing In Your Health

One other thing people think about cutting back on to pay off debt is taking care of themselves. While I have no problem with cutting things like salon visits, pedicures, manicures, or a monthly massage from your budget, you should never stop taking care of your health.

Without your health, you won’t be able to earn money to live or pay off your debt. In fact, you may even rack up more debt if you don’t take proper care of yourself and you end up with doctor or hospital bills. You need to take care of yourself as well as you can for as little money as you can while you work on paying off your debt.

This means eating well instead of surviving off of canned soup and ramen noodles to save on groceries. Go to the doctor when you are sick. Take preventative action to avoid illness and injury. Get enough sleep and drink plenty of water. These basics are often enough to keep you relatively healthy without a lot of added cost.

Final Thots

While there are plenty of things you can do to help pay off debt more quickly, sometimes finding a balance between multiple financial goals is the way to go – even if it means progress may be slower.

Author Bio: Kayla is a freelance personal finance writer who enjoys sharing her story around the internet. You can find more of her money tips on

[Photo Credit: jarmoluk]

1 thought on “How To Balance Multiple Financial Goals When You’re In Debt”

  1. I think that it is important to build a little savings – even if you are trying to pay off debt. If you don’t and you need a new tire or your furnace fixed, etc. then you will end up more in debt. Great tips, thanks for sharing!

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