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Pay debt, invest, or build emergency fund?

Which of these do you think is the smartest or most useful financial goal to start with - paying off debt, creating an investment portfolio, or building up an emergency fund?

Before the Great Recession, I would have said that paying off debt was the most important place to start.  But after seeing how long it can take to get another job, which usually means racking up more debt anyway, I now believe that building a solid emergency fund is the way to go.

Personal finance decisions are not the simplest, and wiping out debt should be the ideal right choice for anyone. I prefer to pay off debt first rather than add to my emergency fund, but then I also strive to have emergency savings.

This is definitely a tough one; however, if I were you, I would definitely pay off my debts before doing anything else. But then again, that's just me.

I'm like @cassie, I'd rather pay off my debts first.  Some of that is psychological because I freeze up and have a hard time making decisions when I know I'm in the red.  This inability to make choices in business has cost more money in the long run.

To me, managing debt and building savings are the key foundations of financial wellness.  Investing is important, but when you have debt you're likely paying interest on the amount and that quickly outpaces any investment gains.

I think we can look at this topic two-fold. Personal finance matters can be easy to handle, but when it comes to farm work, it helps to speak to a financial consultant. In any business, it is vital to monitor your debt levels.

I would focus on paying down debt and building up an emergency fund before I started investing. Interest rates on credit cars are insanely high, so if you have credit card debt, I would start there.


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