Are Wedding Loans A Crazy Idea? 10 Things To Think About For Your Big Day

wedding loans

wedding loansLately, I’ve been seeing a lot of talk about wedding loans. And as a personal finance blogger, this worries me a bit.

Getting married is very exciting, and in the beginning, you’re probably thinking about what your wedding will be like. All of your favorite family and friends, good food, dancing, and whatever else your heart desires.

But then, reality hits – how will you pay for it all?

Shockingly, many couples take out wedding loans to finance their big day.

It seems like more and more people around me are getting wedding loans in order to afford their wedding, and there’s a big industry growing that is trying to normalize marriage loans as well. I’ve even seen advertisements for wedding loans for bad credit!

I’ve also noticed more people putting their weddings on credit cards, which is very dangerous when you consider that the average credit card interest rate is now over 21%.

For many people, having a wedding is important. Some may have even been thinking about their wedding since they were young. 

However with an average wedding cost of $29,858 in 2019, having the wedding of your dreams can be very, very inexpensive. And in some states, there’s an even higher average – in New York City it’s $88,176, and in South Florida it’s $51,073.

Some couples may have started saving money for their weddings years in advance, and others may have parents who will help pay for some or all of their wedding.

But if you don’t have enough money for your wedding, many are tempted to take out wedding loans in order to “afford” a wedding.

Having a wedding can be fun, but it is not worth it to start out your new life with debt. Wedding debt can cause arguments, stress, financial problems, and more. It can even cause you and your spouse to resent one another, and that’s not a good way to begin a marriage.

The scary thing is that many people consider debt to be normal, so they have no problem taking on debt to pay for things. But, just because everyone else is doing it, that doesn’t mean you need to as well. This is true for smaller purchases like clothing, to big expenses like you wedding.

Weddings can be expensive or they can be affordable. You can have a wedding on any budget, no matter how low your budget may be. You may have to get creative or prioritize some things, but remember, you can get married for just the cost of a marriage license!

If you’re thinking about taking out a taking out a loan for a wedding, please read today’s post before you do anything you may regret.

Related content:

Here is why I recommend avoiding wedding loans.


It’s another monthly bill.

According to Business Insider, 28% of couples go into debt for their wedding.

That is much higher than I thought it would be!

By getting wedding loans or putting your wedding on a credit card, you are giving yourself one more thing to pay for. It’s another payment you will have to make every month.

Wedding loans don’t mean that your wedding is free!

Are you really sure that you want to take out a loan for your wedding and have to pay a monthly expense until it is fully paid off?

It could be months or even years until you have paid off your wedding loan.

If you have student loans, a mortgage, car payments, etc., adding a wedding loan on top of it all sounds like a lot of financial stress.


Why is an expensive wedding important to you?

One thing you should think about is why do you feel the need to spend so much on your wedding? 

I know weddings are a very special day, but lenders for wedding loans prey on those who believe their “once in a lifetime event” should be the biggest and most expensive party ever. Sadly, many people believe that they need a big wedding and that it’s normal to have high wedding costs. And many do it to keep up with others.

Your wedding is a special day, no matter how big your wedding is or how much it costs.

By determining what YOU truly want out of a wedding, you’ll probably be able to save money by thinking about your true needs and wants. 

Also, think about what other things in life may be more important to you than an expensive wedding. Perhaps, you’d rather be saving for a home, travel, starting a family, retirement, or something else?


It can add stress to your new marriage.

Starting out a new marriage with wedding debt can add a huge amount of stress.

And, it’s stress that you can easily avoid.

Wedding loans can add a lot of financial stress to a person’s life. The amount of happiness you get from having an expensive wedding will probably never match the amount of hardship that debt will add to your life.

Debt can cause you to:

  • Not reach retirement
  • Not reach your dreams
  • Have fewer days off
  • Stress about keeping up with others
  • Stress over paying bills

And more!

And, financial issues are usually what couples fight about more than anything. Is that really how you want to start your marriage?

Living debt free means less financial stress, and you can be in control and live the life you want.


There are high interest charges on wedding loans.

Wedding loans aren’t cheap – you will most likely be paying a high interest rate if you finance your wedding.

I did a quick search for wedding loans, and it was common to see interest rates of anywhere from around 6% to 35%. 

This will make your wedding cost even more than what you originally thought it would be. 

Here’s an example: if you took out a wedding loan for $30,000 on a 5-year term at a 17% interest rate, you would end up paying $44,735 for your wedding. That’s almost $15,000 more! Even a wedding loan with an interest rate of 7% will cost you $5,000 more over the course of your loan term.

It’s only one day.

I hate to say this, but after being married for some time, I realize how true it is – your wedding is only one day. 

Taking out a huge amount of debt for one day is not something to take lightly. After all, you may forget a lot of details about your wedding, and these may be things you financed for thousands of dollars.

You and your spouse have the rest of your life ahead of you with lots of happy memories, and many of them will be completely free.

Some studies say that a cheap wedding is the key to a happy marriage.

A few years ago a study found that couples who spend the least on their weddings were more likely to have longer-lasting marriages than those who spent lots of money on a wedding. In fact, weddings that were $20,000 or more resulted in higher divorce rates, and the lowest rates of divorce were among those who spent $1,000 or less on their wedding.

Researchers weren’t sure if the results were about the type of couples who spent less on a wedding or the stress of an expensive wedding, but it’s interesting to think about.

Wedding expectations are becoming unrealistic.

One thing I’ve noticed is that weddings now include week-long bachelor or bachelorette parties, entire wedding weekends, destination weddings, and customized or personalized everything. And there are some couples that start their wedding celebrations weeks in advance.

You can see those big events all over Facebook and Instagram, and it’s really easy to think that you need a wedding like that too. But, just because someone you know had an expensive wedding doesn’t mean you should too.

You don’t know how much someone spent, how much help they had paying for their wedding, or how much they took out in wedding loans.

There are plenty of affordable ways to get married.

Instead of taking out weddings loans, I highly recommend finding more affordable ways to get married.

You can have a great wedding for much less than the average of $30,000.

Here are some ways that you can have a more affordable wedding:

  • Skip the wedding altogether. You don’t need a wedding in order to get married! You can simply go to the courthouse. If you want to spend time with close family and friends on that day, you could simply go to a restaurant or someone’s home afterwards.
  • Have a smaller wedding. The bigger your wedding, the more costly your wedding will most likely be.
  • Set a budget. If you want a bigger wedding, please make sure you can afford it. Start off by creating a budget.
  • Elope in a vacation spot. While this option will still cost you money, you may be able to have a fun wedding and honeymoon all in one, for much less than what a traditional wedding may cost you.
  • Find a more affordable wedding ring. Wedding rings are usually one of the highest costs of getting married. You can save a lot of money by choosing something more affordable without taking on any debt.
  • DIY your wedding. More and more couples seem to be going the DIY wedding route when it comes to their special day. Some want to save a little money, some want to be more involved in their wedding, or some have a certain plan they want to follow and DIY is the only way for them to do that. I personally DIYed a LOT at my wedding. Learn more at DIY Wedding Ideas – Worth It Or A Waste Of Money?
  • Delay the wedding. If you still want a more expensive wedding than you can afford, then you may want to delay the wedding so that you have more time to save.

There are easy ways to save up for your wedding.

Speaking of saving up for your wedding, there are so many ways to save for one now. 

There are tons of ways to make extra money, there are savings challenges, and there are even apps that make it easy to save. 

Here are a few articles that will help you save for your big day:

With so many options, taking out a marriage loan can be a costly mistake that you can easily avoid

In the end, it’s your wedding.

One of the reasons that so many people go overboard with the cost of their weddings, which leads to wedding loans, is that they think they have to have the big weddings they see on social media, TV shows, and movies. 

But, that just isn’t realistic for everyone.

You are the only one who should get to determine the kind of wedding you have. 

If you want a big, expensive wedding, that’s okay, but make sure you truly want it and can afford it.

The same goes if you really want a small, inexpensive wedding. That doesn’t mean your wedding will be any less meaningful. 

Think about your priorities, your budget, and make a plan to get there. Your dream wedding is the one you want, not what society tells you that you need.

What do you think of wedding loans? Do you think that wedding debt is worthwhile?

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5 Unique Ways College Entrepreneurs Can Earn a Great Side Income

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As demand increased, Chappell and Finfrock compared their class schedules and came up with a set work schedule. They take orders throughout the week, but bake only on Monday and Wednesday, and weekends if needed. Customers pick up their own orders from a box outside their house.

Early Risers Sourdough Bread Business

“I sit down and cut all the pieces and put them in a stack. Then if I get two shirts sewn per day it doesn’t end up being a ton of work at once,” she said.
They used their savings to buy ingredients and a few pans, then landed a big order. A friend’s father ordered 50 loaves to give to his employees at a technology consulting business.
Chappell and her dad made a few loaves over the summer while she was home in Atlanta, then she and Finfrock worked on perfecting it.

Two girls photograph freshly baked bread they made.
Finfrock, left, and Chappell have sold 308 loaves of homemade sourdough bread since they started Early Risers Sourdough in October 2020. Photo courtesy of Julia Finfrock

The uniform design allows for more mass production because she has focused work sessions for cutting and others for sewing.
The company’s “Lift and Tell” program encourages “outgoing students interested in marketing” to spread the word about the moving services available year-round by handing out flyers or posting on social media. These marketers make per referral, capped at ,000.
Though Knack is based on one-on-one help, tutors may lead small group sessions. In these cases, their rate goes up 50% for two students, 80% for three and 100% for four. For example, if a tutor makes an hour for one student, they make an hour for two, an hour for three and an hour for four.
“We really had to think about what people were willing to pay and consider how much time it took to make and the cost of our ingredients,” Finfrock said.
At first, she charged each for the shirts, but they sold out in minutes. She raised the price to and they sell well.
“My grandmother taught me how to sew on my Barbie sewing machine probably when I was 7,” Trout recalled. “Then in eighth grade I nannied for a family in return for sewing lessons from the mom.”

JannyTans Spray Tans

“We kept reading about it and changing things and eventually we perfected it,” said Chappell. “We kept trying different amounts of salt. And we had to get the temperature of the oven right. We had to get it brown enough without burning the outside but cook it through.”
College Hunks Hauling Junk & Moving also hires college students as well as other people who can lift 50 pounds. According to, the pay ranges from .63 per hour for a manager on duty to .73 per hour for a higher-level consultant.
Then the quarantine and a realization about textile waste changed her business model.
Sarah Chappell and Julia Finfrock have sold 308 loaves of homemade sourdough bread since they started Early Risers Sourdough in October 2020. What started as a distraction borne out of the pandemic surge in sourdough popularity has become a thriving business for the two seniors and roommates at Vanderbilt University.

A college student stands with her sunless spray tan kit in her backyard.
Skidmore, 21, a senior at Vanderbilt University, made extra money by selling sunless spray tans for $15 to friends. Skidmore was photographed at her family’s St. Petersburg, Fla., home with the machine and popup tent she uses. Chris Zuppa/The Penny Hoarder

There is a learning curve. (Remember the mistakes Ross Geller made on “Friends” when they asked if he got his spray tan on the sun?)
So she started buying clothes made of fabric with interesting designs that she could cut and use as “raw” fabric. She used a pattern for a sleeveless shirt with four different pieces that could be cut from various clothing articles she bought. Now she could buy something that was priced really low because maybe it had a stain, or wasn’t stylish, yet it still supplied fabric for individual pieces of the shirts.
An estimated 11 million tons of textiles ending up in landfills each year, plenty of it from unsold thrift store clothing.

Knack Tutoring 

But traditional jobs have become scarcer during the COVID-19 pandemic. Here are five less obvious ways college entrepreneurs are earning money, gaining experience and setting themselves up for impressive resumes.
She’d been working as a lifeguard at the university pool when it was shut down in August because of COVID-19. Then she remembered having met someone with a spray tanning business, who shared the secrets of the trade.
So, with an average of 10 to 20 tans a week at each, she’s making 0 to 0 weekly minus the cost of the solution. Skidmore created an Instagram for her business, JannyTans, and taught herself about spray tanning.
“It was a lot of trial and error,” Finfrock said.

A woman models overalls made. In the other two photos, pants and a long sleeve shirt are shown. All items of clothing were made from thrift store fabrics.
Christie Gillies models an outfit made by Trout, not pictured, founder of PuppyCatCo. Trout makes $700 to $1,500 a month selling pants and sleeveless tops she sews out of fabric from thrift store clothing. Photos courtesy of Ella Trout


Katherine Snow Smith is a freelance reporter and editor in St. Petersburg, Fla., and author of Rules for the Southern Rulebreaker: Missteps and Lessons Learned.
Along with making money while in college, a key part of Knack is the connections it offers for tutors and employers. Businesses that sponsor and supplement the cost of tutoring review tutors for job opportunities. On campuses where there are sponsorships or the university pays for the tutoring (so that it’s free to students), tutors’ rates are set and average an hour. Because Knack has been paid by the university or a sponsor, tutors collect their payment in full.  In cases when tutors set their own rate, Knack collects a fee of 2.9 percent plus .30 per transaction.
Ready to stop worrying about money?
“I got into all of these YouTube videos of people upcycling their clothing during quarantine. It made me think I should start making my products out of thrift store clothes instead of adding more new clothing. It would actually save me money (on supplies) and be better for the environment,” she said.
“I started sewing just for fun during the quarantine because I had so much more time on my hands,” Trout said. “Around that time, it dawned on me that I was not being very environmentally conscious with the T-shirts I was importing for screen printing.” She bought T-shirts made overseas in bulk for .99 each and sold them for and up after screen-printing them by hand.
“We knew we had a guaranteed source of revenue coming in the next few days, so it forced us to use the money we had made so far and buy more supplies,” Finfrock said. They bought proofing baskets to help shape the dough and two more Dutch ovens. The baskets made the bread look and taste better, and boosted sales on campus. Her on-the-job learning has taught her a few things about running her tanning business. Skidmore uses baby wipes to clean up drips and wipe off the solution that sticks to polished nails. A towel is also a must, for clients to stand on while they are in the tent, which comes with the machine. A tan usually lasts about 10 days if clients don’t exfoliate too much.
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At first, Trout bought dresses, shirts and pants then upcycled them by adding patches she designed or drawing original art on the clothes. They sold well on her Instagram, puppycatco, but it was hard to predict costs and the time it would take to create since each product was a new endeavor.
“It’s definitely more reliable to be able to produce more of the same design,” Trout explained. “Every product will be unique because it’s made from different material, but the pattern remains the same.”
Ella Trout, a student at the University of Vermont, makes 0 to ,500 a month selling pants and sleeveless tops she sews out of fabric from thrift store clothing. The 20-year-old college entrepreneur started her business, PuppyCatCo, selling T-shirts she screen-printed with her original designs of dogs and cats a couple years earlier.
Trout has sewn since she was a child.
“We hear tutors saying ‘I was able to pay my rent because of Knack’ and ‘this gave me the flexibility to earn extra money because I have a kid at home or I have another full-time job,’ said Samyr Qureshi, Knack CEO and co-founder. “We’ve also heard students say they wouldn’t have walked across the stage to graduate without their tutor.”

Moving Means Money

Friends doubled as taste testers and declared the bread good enough to sell. So they came up with the name EarlyRisers, started an Instagram account and priced the bread at a loaf.
“It definitely took a little bit of practice. I watched a lot of YouTube tutorials,” Skidmore said.  “My roommates were kind enough to be the first guinea pigs. But they looked a lot better than I thought they were going to look.”
College kids wanting to make extra money can always drive for Uber or deliver food for DoorDash, Grubhub or similar apps. They can also bus tables, wait tables, work in commercial kitchens or provide childcare, of course.
Knack is an app that matches students and tutors within the same college. The tutors have taken the courses students need help in and proven they were successful. Tutors make an average of an hour, and in most cases, that’s paid by the university.
The entrepreneurs recently added new flavors, such as chocolate chip, sundried tomato and basil, rosemary and garlic, that sell for and .
Skidmore ordered the 0 Aura Allure Spray Tan Machine that came with three trial sizes of different toned solutions. Each full-sized bottle of solution is . “Normally I can get about 35 to 40 tans out of one of those bottles,” she said. <!–


It gives students boxes, then they pack up the contents of their dorm rooms or apartments when they are moving. College Truckers employees take the boxes to a storage unit near campus for up to three months. When the next term starts, the boxes are delivered to wherever the student is living. Pricing is based on the number and size of boxes and starts at a minimum of 5 for about 60 cubic feet of packing and storage space.

10 of the Best Ways Anyone Can Save on Car Costs

Woman with money in car dealership
RomanR /

New or used, sporty or practical, a car keeps wringing money out of its owner throughout its lifetime. Gas, oil changes, accidents — no question, a car is an expensive family member.

But for many of us, a car is also a necessity. Until that “Star Trek” transporter technology arrives, we’ll be driving — and fixing, filling up and coaxing — our cars to keep running for years.

That’s why even the smallest ways to save on car costs are important. From the right insurance policy to simple car-maintenance tips, knowing how to keep your car’s monetary demands at bay can leave more cash in your wallet.

Rev your engines — here are tips for saving on car costs that everyone can use.

1. Shop around for a better rate

hands Blue Toy Car On The Reflective Desk
Andrey_Popov /

Switching vehicle insurance companies might save you a bundle.

In “6 Real Ways to Save on Your Car Costs,” Money Talks News writer Miranda Marquit suggests using The Zebra, a car insurance search engine, to get free quotes for changing your coverage.

To use The Zebra, visit the website and enter your ZIP code. Answer some basic questions, and get your quotes. You can also find the best car insurance options listed by state and vehicle. The Zebra does not sell users’ information to third parties or spammers, so you won’t get sales calls from doing a search.

Gabi is another car insurance search engine. In under two minutes, you can easily submit your current insurance policy and let Gabi shop around for the best coverage, delivering as many as 20 quotes.

Or, if you prefer, use The Zebra’s licensed insurance brokers to ask questions and understand your options.

2. Keep tires properly inflated

Orrathai Poolsawat /

Driving with properly inflated tires can improve your gas mileage by an average of 4%, the Environmental Protection Agency (EPA) reports.

That one improvement will show up at the gas pump.

And it’s easier than ever to do. You can find digital and analog gauges to buy for a few dollars that are easy to use and read. Some newer vehicles may even sport a digital readout of the inflation level for tires.

3. Trim your car insurance premiums


Take a little time to shave even more off your vehicle insurance bill. Start by reading Money Talks News founder Stacy Johnson’s “How to Get the Best Possible Deal on Car Insurance.”

Next, try these steps:

  • Call your insurance agent. Ask how you can save on your insurance. For example, discuss raising your deductibles (which may lower your premium) or whether it is no longer worthwhile to pay for comprehensive and collision coverage for an older vehicle. Also, ask about getting a deal for bundling your auto insurance with other policies, such as homeowners or renters insurance.
  • Take a defensive driving class. Careful drivers are cheaper to insure. If you’re an AARP member, there’s even an online course you can take. says: “[S]tates may require insurers to offer certain discounts to encourage good driver behavior — such as taking defensive driving courses.”

4. Rent out your car to help pay its upkeep

Man in car receiving keys.
Ivanko80 /

Get your car to help earn its keep by renting it to other people when you aren’t driving it.

Turo is a car-sharing marketplace, sort of like an Airbnb for vehicles. Turo’s website is where people who want to rent a ride can see what’s available in their area.

Our article “How to Make Extra Money Renting Out Your Car” has the details.

5. Don’t be a car snob /

When you buy or lease your next car, think seriously about getting a less-expensive model.

Here’s where you can save thousands of dollars from the start simply by choosing a Mazda over a Mercedes, or a slightly used car over a brand-spanking-new vehicle.

Money Talks News founder Stacy Johnson says he’s never bought a new car, since a new vehicle loses thousands in value the minute you drive it off the lot.

Depreciation can account for nearly 40% of the expense of owning a new vehicle, costing you more than $3,000 per year, Money Talks News reports.

6. Take care of your car

Lemusique /

You don’t have to baby your car, but don’t ignore its needs, either.

Regular oil changes, air-filter replacements and even things as simple as new wiper blades can keep it purring longer.

7. Handle small repairs yourself

antoniodiaz /

Not everyone is a mechanic. But these days, many simple car-maintenance items can be performed at home by even fairly new drivers.

Oil changes, tire rotations and air-filter replacement don’t really require a professional to do them. Get started by following the steps in “8 Car Repairs and Maintenance Tasks You Can DIY.”

Other good ideas:

  • Ask a handy friend to show you how to do maintenance jobs the first time.
  • Take a basic car know-how course at your community college.

8. Relax your hot foot

Alexandru Nika /

If your speed goes up, your gas mileage will go down. There’s no trophy for being the Mario Andretti of your Minnesota suburb.

Likewise, don’t slam your foot down on your brake pedal either. You’ll extend the life of your brake pads by coasting or easing into stops rather than constantly pounding on the brakes.

9. Use cruise control

Holyshyn Oleh /

Know how and when to engage your cruise control, and don’t be afraid to use it. AARP estimates doing so can reduce your highway fuel usage by 7%.

Depending on how much you drive and how much of that travel is on the highway, you could save $100 or more annually.

10. Be smart about gas

Vera Petrunina /

Someday, we may all have electric cars. But until then, gasoline will remain a major part of your car budget.

Be smart about where you buy it and how you pay for it. Many grocery stores or credit cards offer loyalty points that can be used at certain gas stations. Don’t let those go to waste.

Also, try checking into smartphone apps, like GasBuddy, that can help you locate the cheapest price on gas near you.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.


Pay Off Debt Or Save Money – Is One Better For You?

Should you pay off debt or save money?

I wish this was a super easy article where I could just give you a clear answer about whether you should pay off debt or save money, but that’s just not how personal finance works.

pay off debt or save money

pay off debt or save money

Every situation is different, and today, I’d like to go over different circumstances so you can figure out the best answer for your personal situation.

Whether you have a mortgage, student loans, a car loan, credit card debt, medical loans, or something else, you may be wondering if you should only focus on paying off your debt and how saving money fits in as well.

And, you may be stuck.

A big question when paying off debt is if that should be your sole focus. Should you still be trying to save money while paying off your debt?

Or, should all of the extra money you have be going towards your debt?

You may be wondering things such as:

  • Should I pay off debt or emergency fund first, as in set some money aside for emergencies?
  • Should I pay off debt or save up for a downpayment?
  • Should I pay off debt or save during a recession?
  • Can I pay off debt AND save money at the same time?

And so on and so on.

Paying off your debt is a great thing to think about.

However, where does saving money come in when it comes to your overall financial plan? 

This becomes the really tough decision – should you pay off debt or save money? Is It better to pay off debt or save? Should you do both at the same time? 

I am asked these questions all the time because people realize that both are very important personal finance decisions. But, everyone is going to have to make the best choice for themselves.

If you’ve read How I Paid Off $40,000 In Student Loans in 7 Months, then you know that I paid off my student loans quite quickly. In order to do this, I had to decide whether to focus on my student loans and pay off debt, or invest in my long term savings plan.

It was an incredibly tough decision to make, but I made paying off my debt my sole focus.

Deciding to pay off my debt while putting $0 towards my savings did not sit well with about 50% of my readers.

But, that’s personal finance – it’s personal!

Just because I made this choice doesn’t mean that it’s the only choice. In fact, I think that saving some would have been an equally good decision (maybe even better).

If you are asking yourself whether to pay off debt or save money, I can’t give you a definitive answer because everyone’s situation is so different. 

However, I am going to go over some common questions about this topic to help you make the smartest decision for your situation.

Content related to paying off debt or saving money:

Should you pay off debt or save money?


Are you paying the minimum payment on your debt?

In pretty much every situation, you should always pay at least the minimum balance on your debt.

So many people do not really understand what a minimum payment is, so before I talk any more about deciding to pay off debt or save money, I want to talk about this.

Here’s a basic breakdown of what minimum payments are:

  • Minimum payments are basically the smallest amount your lender will let you pay each month.
  • Making only the minimum payment leads to paying more in the long run because of interest charges.
  • While minimum payments may keep you in good standing, they can affect your overall credit score.

You should always try to pay more than the minimum payment, even as you decide to pay off debt or save money. If you do not, you will have to pay interest charges, which may inflate your credit card debt significantly each month.

Related: How Do Credit Cards Work? I Answer The Most Important Questions


Should you pay off debt or save money during a recession?

In today’s current environment, this is an important and popular topic to talk about.

While I think that you should make sure you are paying the minimum payments on your debt each month, you also want to think about the future. If you are putting a lot of money towards your debt each month but have the possibility of losing your job, then you may want to build up your emergency savings as much as you can.

If you have a stable and secure job that you don’t think would be impacted by a recession (it’s very hard to be certain about this), then you may decide to continue to pay off your debt as quickly as possible.

I have heard many people say that 2020 has taught them the importance of having a larger emergency fund. Their experiences are helping them decide whether or not to pay off debt or save money, and many are choosing to save.


Do you have an emergency fund? Should you have an emergency fund if you are in debt?

So many people wonder if they should have an emergency fund or pay off debt.

I am a big fan of emergency funds, and I think most people should have one even if they are paying off debt.

In fact, I had an emergency fund while I was paying off my debt.

Now, I know that some of you may want to fight me over this, but I had an emergency fund because you never know when something unexpected will happen. It’s just that simple.

I recommend having an emergency fund of at least $1,000 while you’re paying off debt – it doesn’t need to be the full six months (or whatever number) of expenses. $1,000 is still a small cushion to help you in case of an emergency.

After that amount, you need to determine what you are comfortable with.

Having an emergency fund protects you from taking on more debt, and it will help you continue making your debt payments if something happens.

What if you had a medical emergency, immediate home or car repair, and more?

Having $1,000 in your emergency fund versus $0 can make all the difference if something comes up. You will be less likely to add to your debt if you have money set aside specifically for emergency expenses.

Without an emergency fund, you may add to your debt, and it will possibly be at a higher interest rate because you may have to use a credit card. This can turn into a disastrous situation. 

You have been working so hard to get out of debt, and an emergency fund can help you stay on track.

Also, even if you can only manage $100 to $500 right now, that is better than nothing. It may not cover the entire cost of your emergency, but it will help you a little bit. 

Note: On top of an emergency fund, I also recommend having an emergency binder. I recommend checking out the In Case of Emergency Binder to help you with creating your own emergency binder. This is a 100+ page fillable PDF workbook. There are 14 sections that go over key personal documents, household information, medical information, insurance policies, and more.


Should you use your credit card as an emergency fund?

You may be thinking “Well, I can just pay off my debt and not save for an emergency fund, and if something comes up, I’ll just use my credit card.”

Before you do this, I want you to fully think about it.

There’s a growing number of people who are looking to their credit card as their emergency fund. Some are doing it by choice, and others are forced to use their credit card when an emergency comes up because they do not have enough money saved.

This is something that scares me. While credit cards may work for some, I believe that a more traditional emergency savings fund is a better solution for the average person.

If your situation is quite risky, then using a credit card for your emergency fund may be a bad idea. This is because there is a greater chance of racking up credit card debt and being unable to pay it off whenever an emergency arises.

You are taking on a lot of risk if you are relying entirely on a credit card emergency fund.

You never know if something may come up, how big the expense may be, and whether or not you will have a large enough credit limit to fund the expense.

Plus, the interest rate on your credit card may hover somewhere near 20% or more, which makes for an expensive bill if you are unable to pay your credit card balance before interest accrues.

There are situations where using a credit card for your emergency savings fund may not be a completely bad idea. If you know that you can pay off a large expense within one month, then using your credit card as an emergency fund may not be a bad idea, but you still need to be careful before adding any debt.

See, the problem with this thinking is what happens if you lose your job? Many people have emergency funds so that they can support themselves if they were to lose their job. What would happen if you relied on credit cards but lost your main source of income?

This could lead to a lot of credit card debt.

My problem with using credit cards as your sole source for an emergency fund is that, in some situations, it may lead to more debt. Sure, some people can use their credit cards to their advantage, but the average person most likely needs a real emergency fund that they can count on.

My point here is to be honest with yourself so that you can prevent yourself from adding any debt and being in an even worse situation.


How fast do you want to get rid of your debt?

How quickly you want to pay off your debt will play a big role in your decision to pay off debt or save money. People who want to quickly get rid of their debt will most likely want it to be their sole focus.

Here’s what I did when I decided to pay off my $40,000 student loan debt in 7 months:

  1. I saved up a few months of expenses in an emergency fund. Since my student loans were at a 0% interest rate while I was in school, I saved money in an emergency fund just in case I needed it.
  2. Once my student loans came due, I decided to knock them out as quickly as I could.
  3. I then started putting 100% of what I could towards debt. Towards the end, I used a portion of my emergency fund to pay off my student loan debt.

Like I keep saying, my decision isn’t perfect for everyone. This is simply what I did.

I chose this option because I wanted my student loans to be completely gone as quickly as possible.

That huge monthly payment felt like such a big weight hanging over my head, and I wanted to stop worrying about it.

If you hate debt as much as I hated my student loans, then this may be the option for you as well.

Some people, like myself, get stressed out by debt, or certain types of debt, which can impact other areas of their lives. 

If having debt is leading to extra stress, which can lead to health issues, impact your relationships, work, etc., then focusing as much energy as possible on debt repayment might be the best option for you.

Eliminating means you are then free to focus on other areas of your financial situation, such as saving money for your future. 

Solely deciding to pay off debt or save money is almost like choosing to single-task versus multitask. You put all of your energy into one thing so you can focus on doing it efficiently and well, and once you are finished with that, you can put all of your energy into your next goal.


What’s the interest rate on your debt?

Now, there’s a chance that you may not really mind debt. Debt doesn’t have to be the end of the world, and many people are able to use debt to their advantage.

That might sound crazy, but it can be done!

If you have a low interest rate, then this may be something that you are thinking about – saving more money instead of throwing everything towards your debt.

I still remember my finance and economics professor in college talking to me about his student loans. He wasn’t worried about paying them off quickly because the interest rates were 2% or less. Instead, he put as much money towards investing because he figured he could beat his interest rate by investing in the stock market and in other areas of his life.

However, if your interest rate is high, then you may want to quickly pay off your debt.

For example, credit cards often have interest rates around 20%. There are also high interest rate student loans (like private student loans), high interest rate car loans, crazy expensive leases (such as on furniture), and more. 

These are the types of debt that you will really want to focus on because as that interest adds up, you ended up paying exponentially more in the long run.

The higher the interest rate, the more you should think about quickly paying off those debts. Interest on those debts is just going to keep piling up until it just seems so unmanageable, and this can make your long term savings and investing goals seem impossible to reach.

My personal thought on whether to pay off debt or save money in this situation is that if your interest rate is around 6-8% or higher, then you may want to think about paying off that debt a little quicker so that the interest charges don’t build up too much.


Do you get a company match on your retirement savings?

If your company provides a 401(k) match, then this is a benefit that you will most likely want to accept as you decide to pay off debt or save money and invest for retirement. 

If your company matches your 401(k) contribution, they are giving you money, for free. Even if you add a little in, you can still take advantage of their contribution.

If you don’t take it, then you are leaving a valuable benefit on the table, one that you have earned by working. It’s not like you would just let the company keep a paycheck of yours, and you can treat a company match similarly!

Should I pay off debt or save for a house deposit?

Because mortgage interest rates are so low right now, I’ve been hearing a lot of people talk about wanting to take advantage of those low rates and buy a house. For many, this means they will have to decide if they want to pay off debt or save money for a down payment.

The amount of money you have for a downpayment means you can take out a smaller loan and get a better interest rate, but having too much debt means you might not get the loan in the first place. And, because debt can negatively affect your credit score, you may end up with a higher mortgage rate.

You may want to play around with a mortgage interest rate calculator (there are lots of free ones online) and see how what you pay over the course of your mortgage will change with different interest rates and down payment amounts. 

Then, you will have to think about the kind of debt you have. Remember, high interest rate debt can cost you much more in the long run if you are only paying the minimum amount due each month.

Determining if you should pay off debt or save for house isn’t something you should take lightly, and there are lots of factors to consider, especially if you already have a lot of debt.


Should you pay off a mortgage quickly or not?

Recently, I had a great guest post here on Making Sense of Cents about a reader who was wondering if they should pay off their mortgage quickly or not. They were wondering if they should use savings to pay off debt.

You can read the full article here: Should we pay off our mortgage quickly or not?

I wanted to share their thought process in this article, though, as it is so relatable and applicable.

Here’s a quick summary of their pros and cons.

Pros to paying off a mortgage quickly:

  • They’d free up cash flow that would otherwise be used to make a mortgage payment each month.
  • They’d be debt free. For life. From all debts. Forever.
  • It feels good. They’d achieve peace if they paid off the mortgage ahead of time, especially before retirement.
  • They’d have the mortgage paid off before their kids headed off to college.
  • The interest they’d save! They would save thousands upon thousands of dollars in interest if they worked diligently to pay it off.

Cons to paying off a mortgage quickly:

  • Lots of cash would be tied up in the house – a non-liquid asset.
  • Their interest rate is low – and the annualized return for the S&P 500 is roughly 10% over the last 90 years. They’d be missing out on higher returns if all of their efforts were put into paying off their house.
  • They’d no longer be eligible for a mortgage interest tax deduction.

 As you can tell, there is a lot to think about!

Do you have a pros and cons list?

The last question leads to the next thing that I think is important when deciding to pay off debt or save money – make a pros and cons list for why you may want to solely focus on paying off debt and what it means for YOU.

Remember, everyone’s pros and cons list will be personal, so I recommend sitting down, grabbing a pen and paper, and actually writing it out.

This will make it feel much more real, and you’ll be able to get your thoughts out and on paper.


How to pay off debt and save money at the same time.

Deciding only to pay off debt or save money doesn’t have to be the only option – you can do both at the same time.

It may take more work, but it can be well worth it to pay off debt and save money at the same time.

Here are some ways to both pay off debt and save money at the same time:

  • Make a budget.
  • Use your tax refund. If you receive a tax refund, you may want to split this between your debt as well as save some of it.
  • Set aside a certain amount out of each paycheck. You can set aside a certain amount of each paycheck to put towards your debt, and a separate amount for your savings.
  • Find ways to make extra money – Here are over 100 different ways to make extra money
  • Start a savings challenge – The $20 Savings Challenge is a great way to easily save $1,040 this year without noticing! All you have to do is save $20 each week for a year, and then you’ll easily have $1,040. If you start this now and do it just until the holidays, you will have a nice chunk of change as well! You can get the free printable here.
  • Use a micro-savings app like Qapital – You can set triggers for saving, like when you post a status update to Facebook, when the space station flies over your house, etc. You can also set automatic deposits, do round-ups, and more.
  • Cut your expenses and split the difference between paying off debt and savings.
  • Pay yourself first.

And the list goes on and on!

Again, deciding to pay off debt or save money isn’t your only option!


Don’t be too hard on yourself.

While I realize that choosing to pay off debt or save money can be an incredibly hard decision to make, you should remember that both are good things to focus on.

Both deciding to pay off debt or save money will bring you closer to achieving your financial goals, and the fact that you are doing one or the other means you are making a positive decision for your future.

This is really important when deciding which to focus on – both choices are good. 

If you are just absolutely stuck and still asking, “Should I save or pay off debt?” then you may want to put half towards your debt and half towards your investments, so that you can move on with life and spend more time improving your finances in other areas.

Also, remember that you can always change your decision and do something different later! If you find that something isn’t working, you can make changes.

Lastly, remember that personal finance is personal. What may have been a great decision for one person doesn’t mean it will always be the best choice for you. You will want to weigh your options and see what is best for your specific situation.

What would be your choice? Should you pay off debt or save money? A healthy balance of the two?

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