Striking a balance: Paying off debt while saving for the future

When you’re eager to get rid of debt, you may want to throw every spare penny toward that goal. You’ll want to temper this instinct by remembering that you have other financial priorities as well. In addition to covering monthly living costs and building an emergency fund to help you maintain financial stability through unplanned expenses, it’s crucial that you consistently save for retirement. To strike the right balance, it can be helpful to sort through your priorities and make sure they align with your current budget.
Choose stability
Balance paying down debt with building up an emergency fund so you can cover unexpected costs, such as a car repair, without having to take on additional debt. If you don’t have an emergency fund in place, set aside an initial amount—say, $500—and see if you can contribute even a small amount to it every month. Ideally, you’ll want a cushion large enough to cover three to six months of living expenses.
Don’t lose sight of your bills
Sometimes, while we are vigorously saving for retirement, we don’t give ourselves enough breathing room when it comes to paying bills and other regular expenses. Paying your bills on time and avoiding fees can help prevent the accumulation of more debt, enabling you to save more toward retirement over time. Review your essential monthly expenses, such as utilities, food, gas and housing, and consider setting up automated payments to ensure recurring bills are paid on time. Then, take a realistic look at where you may be able to trim your spending—perhaps on items like gym memberships, cable TV, eating out or travel—and create more room in your budget to find the best balance between paying down debt and saving for retirement.
Be smart about retirement savings
Don’t let your goal of paying down your debt prevent you from getting “free money” from your retirement plan. Find out how much of your retirement plan contribution your employer will match and then try to put aside at least that amount for retirement each year. Beyond that, try to consistently save 10% to 15% of your earnings (including your employer’s contributions) to help you stay on track for a comfortable retirement. If you’re considering taking a retirement plan loan or withdrawal to pay down your debt, check in with a c redit counseling agency  first to explore all of your options
Have a plan to pay down your debt
Evaluate which debt you want to pay off first. Keep in mind that some forms of debt, such as student loans and mortgages, are generally considered good debt because they can help you move forward in life and build wealth. Other types of debt, such as credit card debt, are often viewed as bad debt, as they tend to have high interest rates. You might prioritize paying off bad debt first as you set up a payment plan.
Monitor your progress
Try not to see getting out of debt as a quick fix. Instead, consider this an opportunity to develop positive financial habits that will give you financial stability and power your long-term financial success. Once you’ve gotten a handle on your spending and created a plan to pay down your debt, monitor your progress on a regular basis. Embrace how you are taking control of your finances and working toward a better financial life. 
TIAA does not provide tax or legal advice. This piece is being provided for educational purposes only and does not constitute a recommendation or advice. You should carefully consider your unique circumstances before making any decisions regarding your student loans.