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Pay Down Debt

Not, I repeat, not, if it will leave you without a cash cushion. In a bad economy, that's a risk you don't want to take: You could clean out your savings account to pay off your credit card, and in turn, your credit card company could close your account, leaving you with nothing to fall back on in an emergency. But if you have a healthy emergency fund, and money to spare, consider putting it toward your high-interest rate debt, which is a guaranteed return on your investment equal to whatever your interest rate is. "If you're in your 40s and 50s, one goal should be to pay off your mortgage," Dunnan says. "If you can do that, when you reach retirement, that's one less payment you have." One less payment is one less strain on your retirement savings.

Another bonus of doing this is that you'll free up some money each month that used to go toward debt repayment. You can then use that to boost your savings even more.

Prioritize

If you only have a little money to sock away, start with an emergency fund. Once you have about six months of expenses in a liquid savings or money market account, you can move on to your retirement goals. If your employer still matches contributions to its plan, contribute at least enough to grab those free dollars—then you can consider a Roth IRA. Saving for your children's college tuition comes last. There is plenty of financial assistance available for college.

More easy ways to save money every day


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