Your Money Mentor Minute

Introduction

Welcome to this week’s edition of Your Money Mentor Minute! This week, I’m covering the topic on “Should I Repay My Debt or Save Instead?” Let’s get started!

Be sure to visit the Move Abroad section below👇👇👇

Should I Repay My Credit Card & Student Loan Debt First, or Save Now for the Future Instead?

When it comes to personal finance, one of the biggest dilemmas people face is deciding whether to pay off debt or focus on saving. Both are essential for financial stability, but the right balance depends on your situation. Let’s break it down so you can make the smartest choice for your money.

1. Assess Your Debt:

Not all debt is created equal. Some types of debt should be tackled immediately, while others can be managed strategically.

🔹 High-Interest Debt (Credit Cards, Personal Loans) – Anything with an interest rate above 7-8% should be a priority. The longer you carry it, the more you pay in interest, making it harder to build wealth. For example, if you have a $10,000 balance on a credit card at 20% interest, and only make minimum payments, it could take years to pay off and cost you thousands in interest. Use a debt repayment calculator like Bankrate's Debt Calculator to see how much you’re really paying over time.

🔹 Low(er)-Interest Debt (Mortgages, Student Loans, Auto Loans) – If your loan has an interest rate under 5%, it might make sense to focus on saving while making minimum payments.

🔹 Variable-Rate Debt – Loans with fluctuating interest rates (like adjustable-rate mortgages) can be risky. Consider paying these down sooner if rates are rising, or refinance them completely.

2. Build a Safety Net First:

Before aggressively paying off debt, make sure you have some savings in place. Here’s why 👇.

✅ Emergency Fund (3-6 months of expenses) – Unexpected costs (medical bills, car repairs, job loss) can happen anytime. If you throw everything at debt and have no savings, you may end up relying on credit again. A tool like Ally Bank’s Savings Calculator can help you figure out how much you should set aside.

✅ Employer 401(k) Match – If your employer matches your retirement contributions, don’t leave free money on the table. Contribute enough to get the full match before focusing heavily on debt.

3. The Best Approach – A Balanced Strategy:

Instead of choosing between saving or paying off debt, aim for a hybrid approach:

📌 Step 1: Make minimum payments on all debts to avoid late fees and penalties.

📌 Step 2: Build an emergency fund of at least $1,000 - $2,000 to cover small surprises.

📌 Step 3: Prioritize paying down high-interest debt aggressively.

📌 Step 4: Contribute to retirement savings (especially if there’s an employer match).

📌 Step 5: Once high-interest debt is gone, split extra cash between saving and paying off lower-interest debt.

When it Makes Sense to Save More Than Repay Debt:

🚀 You Have a Very Low-Interest Loan – For example, if your mortgage is at 3%, but your investments can earn 7%, it may be smarter to invest rather than pay it off early. Example: Someone investing in an S&P 500 index fund with an average return of 10% over time will likely come out ahead compared to paying off a low-interest mortgage.

🚀 Your Job is Unstable – If layoffs are a possibility, building up cash reserves takes priority. Example: If you’re in an industry prone to downturns, such as tech or construction, having a larger emergency fund (6-12 months of expenses) is key.

🚀 You Have Big Expenses Coming Up – If you need a down payment for a house, wedding, or starting a business, saving for these may take precedence over early debt repayment. Example: Instead of aggressively paying down a 4% car loan, you might be better off saving for a 20% home down payment to avoid private mortgage insurance (PMI)..

📖 Additional Tools and Resources to Help You Decide:

🔧 Online Tools & Resources:

• Debt Snowball vs. Debt Avalanche Calculator – Helps determine the best debt repayment strategy for you.

• Ally’s Investment vs. Debt Calculator – See whether investing or paying off debt makes more sense based on your numbers.

• See below 👇 for more tools and resources.

Further Reading & Learning

📖 “The Total Money Makeover” by Dave Ramsey – A step-by-step guide to tackling debt and building savings.
📖 “I Will Teach You to Be Rich” by Ramit Sethi – Covers a more balanced approach to debt and saving.

Final Thoughts & Actionable Tip

Finding the right balance between paying off debt and saving is key to financial success. Start by eliminating high-interest debt, building an emergency fund, and taking advantage of employer retirement matches. Once you have a solid foundation, you can work toward a strategy that fits your financial goals.

💡 Action Tip: Review your debts and savings today. Identify one area where you can make immediate progress—whether it’s boosting your emergency fund or making an extra debt payment. Small steps add up!

Have questions or want personalized guidance on crafting your own personalized debt repayment and savings plan? Let’s chat! Schedule a free consultation today.

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Until next time, here’s to building the life you deserve!

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Your Money Mentor Minute: Quick Wins

Quick Win: Contest Your Property Taxes Every Year.

• How to Do It:

  1. Review Your Property Tax Assessment:

  • Go online to see a copy of your property tax assessment from your local county tax assessor’s office.

  2. File an Appeal:

  • Gather documentation, such as comparable property data, photos, or receipts for repairs that reduce your home’s value (this is optional if using a service to auto contest for you, but it helps).

  • Submit a formal appeal to your local tax authority before the deadline, which varies by location.

  • Use an automated service like Ownwell.com or one that’s similar in your neck of the woods. Simply Google: “Property contesting company online [enter your state]”.

  Example:

  • A homeowner contests their property taxes and successfully reduces the assessed value by $25,000.

  • At a 2.5% tax rate, this saves $625 annually—money that can go toward savings or paying down debt.

  • The online services do EVERYTHING for you, including going to court so you don’t have to.

  • If they are able to reduce your property taxes, then you pay a % of the tax reduction amount as a fee. Depending on the company, I have seen fees range between 25% & 50%. Example- $500 in property taxes saved. Fee is 50%. Thus you pay $250 for their work, and you save the additional $250. A Win/Win all around!!

  • If they are unable to reduce your taxes, then you pay NOTHING. There is ZERO risk to you!!

  Solution: Contesting your property taxes may sound intimidating, but it’s worth the effort. Take an hour this week to review your assessment and explore potential savings. With consistent appeals, you can ensure you’re not overpaying year after year.

  Need help getting started or navigating the process? Reach out—I’m here to guide you!

Your Additional Resources and Tools

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• Mint – The Ultimate Budgeting App. Tracks your spending, categorizes expenses, and helps set budgeting goals. Free and easy to use, and offers alerts for bill payments and spending limits.

• Pair Mint with a savings app/platform like Oportun to automate unused funds into an emergency or investment account.

About the Author, Marc Marquez

I’ve spent over 24 years in the financial services industry as a fiduciary and fully licensed Financial Advisor, helping clients plan for and protect what's most important to them. With having earned my MBA, RICP® (Retirement Income Certified Professional) and CLTC® (Certified in Long-Term Care) designations, I bring a wealth of knowledge to assist people just like you in navigating the complexities of building wealth, retirement, personal financial growth and getting out of debt.

My approach with this newsletter is focused on educating others, and I’m passionate about empowering individuals to take control of their own financial futures. Whether you’re planning for retirement, learning how to invest for growth, or simply managing debt, I'll take the time necessary to break down the complex financial concepts into simple, actionable steps. My mission isn’t just to offer help; it’s to teach YOU how to manage and grow your own money independently, with the confidence to make educated and informed decisions. I would like you to no longer have a fear of getting ahead and a fear of money, and I will show you how to turn your money fears or concerns into action!

Disclaimer: This newsletter is for educational & informational purposes only and does not constitute financial advice. Please consult with your prefered financial advisor for personal advice, or contact me directly for a free initial consultation.

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