{"id":36327,"date":"2025-07-25T12:50:22","date_gmt":"2025-07-25T12:50:22","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/36327\/"},"modified":"2025-07-25T12:50:22","modified_gmt":"2025-07-25T12:50:22","slug":"7-tips-for-balancing-debt-repayment-and-wealth-building","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/36327\/","title":{"rendered":"7 Tips for Balancing Debt Repayment and Wealth Building"},"content":{"rendered":"\n

Having too much debt can hold you back on other financial goals, such as building wealth<\/a> and saving for retirement<\/a>. If having debt feels inevitable, it doesn\u2019t have to be \u2014 you can take steps to pay it down while still planning for the future.<\/p>\n

For You: I\u2019m Retiring a Multimillionaire: Here\u2019s What I Wish I Knew in My 30s<\/a><\/p>\n

Check Out: 5 Cities You Need To Consider If You’re Retiring in 2025<\/a><\/p>\n

Experts explain that it\u2019s more than possible to manage debt repayment<\/a> and wealth building simultaneously by following a few key strategies.<\/p>\n

Paying off debt should largely come before investing, according to Jay Zigmont, Ph.D., a CFP and founder of Childfree Wealth<\/a>.<\/p>\n

\u201cWhen you pay off your debt you effectively get a risk-free, tax-free return of the interest you avoid,\u201d he said. Considering that the average stock market return<\/a> is somewhere between 7% and 10%, paying off a credit card that charges more than 20% interest offers a much higher return, he explained.<\/p>\n

\u201cRemember that your net worth is everything you own minus everything you owe. When you pay down your debt, you raise your net worth just like you would by saving and investing.\u201d<\/p>\n

Explore More: I\u2019m a Financial Advisor: My Clients Who Retire Early All Do These 3 Things<\/a><\/p>\n

Of course, if you\u2019re pausing some expenditures or contributions to free up more money for debt repayment, there\u2019s one that you shouldn\u2019t necessarily pause: putting money towards your retirement plan<\/a>, especially if it\u2019s offered by your employer, according to Andrea Woroch, a consumer and money-saving expert at Andrea Woroch<\/a>.<\/p>\n<\/p>\n

\u201cMany employer-sponsored retirement plans<\/a> offer to match your investments, usually for up to 3% of your salary,\u201d she said. \u201cYou don\u2019t want to miss out on this free money, so you should still consider contributing at least enough to get the full match \u2014 even while working to pay off high interest debt.\u201d<\/p>\n

Many Americans are living paycheck to paycheck these days, so finding extra cash to pay off debt or boost investment and savings can feel impossible, Woroch said.<\/p>\n

\u201cHowever, there are steps you can take to reduce your monthly bills you may not have thought about. Every bit you save can go toward your debt repayment \u2014 and eventually to savings and investments.\u201d<\/p>\n

Woroch recommends:<\/p>\n

Reviewing your mobile data usage and switching to a lower tiered plan if you\u2019re overpaying.<\/p>\n

Negotiating bills with current service providers and asking about new promotions.<\/p>\n

Signing up for e-billing or autopay, which may offer small discounts, or using apps like BillCutterz that will haggle for you.<\/p>\n

Bundling insurance policies and increasing your deductible to save up to 20% on monthly premiums.<\/p>\n

Reviewing your subscriptions and canceling the ones you don\u2019t need or use.<\/p>\n

Cutting back on streaming subscriptions too and using free options through your library app.<\/p>\n

Picking up a side hustle for additional income.<\/p>\n

Story Continues <\/p>\n

Even while paying down debt, contribute whatever you can \u2014 even as little as a few dollars per month \u2014 to an emergency fund, Woroch advised. While the goal is to save up three to six months\u2019 worth of living expenses, every little bit counts.<\/p>\n

You should treat this account as emergency-only and keep it in a separate account from your regular checking or savings account.<\/p>\n

Better yet, store it in a high-yield savings account<\/a>, which offers a higher interest rate than a traditional savings account, so your money works harder for you, Woroch suggested.<\/p>\n

One trick to speed up emergency fund growth is to avoid lifestyle inflation<\/a> when times are good, said Chris Motola, special projects editor and financial analyst at NationalBusinessCapital.com<\/a>.<\/p>\n

\u201cObviously, people want to enjoy their higher income, but if you\u2019re spending all of your gains, you aren\u2019t really improving your economic resilience,\u201d he said. Motola noted that overspending can leave you just as vulnerable financially as you were when you earned less.<\/p>\n

The right budget is the one you can stick to. Woroch likes the zero-based budgeting method, which tracks where each and every dollar goes. \u201cYou know exactly how much you have to spend on very specific expenses such as groceries, entertainment, gas, etc.\u201d<\/p>\n

Jeff Hofmann, head of retail lending at PNC Bank<\/a> suggested the 50\/30\/20 rule of budgeting. It\u2019s a straightforward approach that divides take-home pay into needs, wants and savings.<\/p>\n

\u201cThis method maps out a strategic structure without overly complicating it,\u201d Hofmann said.<\/p>\n

If that feels too rigid, he said a strong alternative could be the 80\/20 method, with 80% covering both needs and wants, and 20% going to savings and debt repayment.<\/p>\n

If you\u2019ve got one high-interest credit card, you don\u2019t have to be stuck with it, Hofmann pointed out. \u201cRegularly reviewing loan and credit card interest rates can help uncover opportunities to lower monthly payments and potentially pay off debt quicker.\u201d<\/p>\n

Credit card balance transfers with 0% introductory rates or debt consolidation loans<\/a> that offer lower fixed rates can reduce interest costs. Even refinancing personal or auto loans can yield savings.<\/p>\n

While these strategies may offer only temporary relief from interest, they allow more of each payment to go toward the principal balance \u2014 potentially accelerating your debt payoff. \u201cThese tools, however, should not be used as an excuse to take on more debt,\u201d Hofmann cautioned.<\/p>\n

Looking to build a legacy? Check out our Life to Legacy guide<\/a> for expert advice and smart moves you can make today.<\/p>\n

More From GOBankingRates<\/p>\n

This article originally appeared on GOBankingRates.com<\/a>: 7 Tips for Balancing Debt Repayment and Wealth Building<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Having too much debt can hold you back on other financial goals, such as building wealth and saving…\n","protected":false},"author":2,"featured_media":15338,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[29746,28,17565,29747,29748,147,530],"class_list":{"0":"post-36327","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-andrea-woroch","9":"tag-business","10":"tag-credit-card","11":"tag-debt-repayment","12":"tag-paying-off-debt","13":"tag-personal-finance","14":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/36327","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=36327"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/36327\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/15338"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=36327"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=36327"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=36327"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}