Optimal Finance Daily - Financial Independence and Money Advice 3389: Should You Save More For Retirement Or Pay Off Debt First? by Mark Dennis with Financial Finesse
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Dec 16, 2025 Torn between saving for retirement and paying off debt? A hybrid approach may be the key. Discover how to balance investment returns while celebrating small debt victories to stay motivated. Learn the math behind capturing employer matches and prioritizing high-interest debts. Plus, find out how tackling smaller balances can boost your momentum. It's all about making retirement feel achievable with monthly targets and smart strategies. Combine financial logic with behavioral boosts for long-term success!
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Capture Employer Match First
- Contribute at least up to your employer's match in the retirement plan to capture a guaranteed return.
- Then apply all extra dollars (after emergency fund) to the highest-interest debt until it's paid off.
Use The Debt Blaster For Speed
- Pay minimums on all debts and throw extra money at the highest-interest balance for fastest elimination.
- This 'debt blaster' is mathematically optimal but may feel unsatisfying emotionally.
Small Wins Fuel Progress
- Paying off smaller balances first can boost motivation even if it's not the cheapest mathematically.
- Behavioral wins matter because sticking to a plan often beats an optimal plan you abandon.