How I choose between savings and debt repayment (Hint: I don't)

Congratulations! You have made the time-honoured decision to do well by your money and your finances. High-fives and cookies for you.

But now that you've made the very easy decision to do something... exactly what are you supposed to do? What's the first step in doing well by your money, particularly as someone dealing with debt?

"Pay off the debt!" one may shout from the heavens. "The math supports it and you save more money!"

"Save for your retirement!" another may cry from the trees. "Compounding is the golden goose and starting now means you have more later!"

"What about that awesome pair of shoes you wanted?" temptation may whisper in your ear from the grasses. "Wouldn't it just be better to be happy now than miserable?"

And so on.

All of it are simple decisions, and yet can become very overwhelming. I mean, the math does support the idea that by paying down debt faster, especially the high interest variety, you just save so much more in interest costs. But the earlier you start saving for retirement, the less you have to save overall in order to retire with a lot of money. 

And those shoes are so pretty! And on sale!

Ultimately one of these many options as far as savings and debt repayment goes has to be the best for you to place your money with, right?

So what's right? Where is the best place for my money to go? Where will it do the most for me? Why is this such a hard question to answer?

Well mostly because there is no right answer to the question. Personal finance is ultimately a personal endeavour and decision because the money you make is yours, or half of it is if you have a spouse. So what works best for you may not work best for me or John or Ann or Mohammed.

But that answer does nothing to help anyone figure out their money. In fact, it leaves you more lost and confused in some ways. And you're still left holding your cash wondering if you're not just better off buying those shoes just to save yourself the second-guessing.

So for those who are looking for answers, here was the one I went with: do what feels right for you. Whether it is throwing every bit of spare change you have into your debt repayment so that you get rid of it as soon as possible or you build up your nest egg as much as you can early, it's down to your own priorities right now or in a couple of weeks from now how you want your money to work for you.

Having been left with a relatively low interest student loan (though the minimum payments are still fairly astronomical) after I got rid of my high interest credit card debt, I don't find debt repayment to be as urgent and pressing a matter for me and my money. Especially since my student loan problem is so big and unwieldy right now, to the point that focusing everything on it currently feels like I'm punching a brick wall. All I end up achieving is a sore hand and more frustration than I can probably deal with.

Right now, I'm in the beginning stages of building a proper emergency fund, putting money into a pension and RRSP and setting up my TFSA for extremely long-term savings. And I am eager to find a way to speed up the process at least until I reached a certain stage where the money can actually be doing stuff for me. But accelerating the process for any of these, particularly my emergency fund and TFSA due to them being much higher priorities as far as my savings goes requires that it requires a bigger chunk of my available extra monthly cash. 

And you know what? I'm okay with some of my money going elsewhere other than towards my debt.

So right now, instead of shuttling all my extra cash one way or another, I tend to just split it down the middle, with half being put towards my student debt and the other half sprinkled among my savings accounts. This way I can gain the benefits of dealing with both priorities and also because this allows me to feel progress in all areas, though spreading myself out means that I see significantly smaller steps.

Some may say I'm spreading myself too thin. Others may point out that mathematically I'm not doing it right. I don't feel as if my money is spread out in too small portions and if anything, right now any positives is taken with some joy of accomplishments in my savings. And it is that happiness that I am focusing on right now to affirm that what I am doing is right for me.

Time may change things however. Rising or falling interest costs, the stock market or any number of other things may see me change gears in my quest. But for now, I like what I'm doing. And that's really what matters.