Should I pay off debt or save first?

Ask The Monctonian starts today. Every Monday the editors answer one reader question about money, work or life. To get things going, we picked the question we hear more than any other.

"I have some credit card debt and no savings at all. Should I pay off the debt first, or start saving?"

The honest answer is: a little of both, in a set order.

First, a small cushion. Before you throw everything at the debt, put aside a small emergency fund, even a few hundred dollars. Without it, the next car repair goes right back on the card and you lose ground. We explained why in your emergency fund comes before your first investment.

Then, the expensive debt. Credit card interest is usually much higher than anything your savings will earn. Paying it off is like getting a guaranteed return equal to that interest rate. Keep paying the minimum on everything, and put every spare dollar toward one card at a time. Our guide to avalanche or snowball helps you pick which one.

Then, build the cushion up. Once the cards are gone, send the same monthly amount to savings until you have a few months of living costs.

The order matters less than starting this week. Pick the first small step and take it.

Have a question? Send it below. We answer one every Monday, and we never print your email.