Myth #4: Saving money is more important in the short term than paying off old debt
According to Bankrate, one in four Americans has more credit card debt than emergency savings. You've got to think long haul on both fronts to save money and pay off debts. Ideally, you should be doing both simultaneously, McBride says. How? It's a two-step approach.
First, he recommends automating the savings process by having money directly deposited from your checking account or from your paycheck into a dedicated savings account. "You're doing the saving before you get the chance to spend the money," McBride says. Plus, if you try to pay off debt and then save, you won't have money to absorb a sudden problem.
Second, you need to take a good hard look at your finances and make sure you're living below your income. "When you're holding yourself accountable, you force yourself to live within your means, and that's how you identify more ways to save," McBride explains. In doing so, you can funnel the difference toward your debt in addition to the money that's direct deposited.