This is a common question posed to financial planners and advisers: “Should I save more for retirement or pay off debt first?” Even well-known personal finance pundits disagree on this one. Mathematically, this is a fairly simple question to answer. Behaviorally, however -- actually taking action and sticking with the plan – approaching this question can be much more difficult.
Let’s assume you sat down recently and reviewed your monthly budget. During that exercise, you were happy to discover that you have a couple hundred “extra” dollars available each month. You now face the happy dilemma of deciding what to do with those dollars. Your basic options are simple, of course. You could spend it, you could save it, or you could pay off some debt.