Money Monday: Pay off debt or start saving? Paul Hood weighs in on a common money dilemma

It’s a question many people face: should you pay off debt first, or start saving? On this week’s Money Monday, financial expert Paul Hood shared his advice on how to strike the right balance.

Q: What makes this decision so tough?

Paul Hood said that while the question seems simple on the surface, the reality is more complicated.

“If you’ve got an 18% credit card and you’re putting money into investments and you’re making 5%, you should pay the credit card off, or should you?” he said, noting that the answer isn’t as straightforward as it may appear.

Q: Why does Hood recommend saving first?

Hood explained that financial decisions are about more than just math — they’re about habits.

“I like to counsel people to start saving before they pay off the debt. Because you want to create, it’s all about habits. It’s all about decision making,” he said.

He recommends building the practice of saving early so it becomes a long-term lifestyle, rather than a short-term fix.

Q: What’s the right order for managing money?

Hood suggests following a simple approach: “I personally think you should give first, save second, live third. And living includes paying off your debt.”

Q: Can people do both at the same time?

Yes, according to Hood. While economics might suggest paying debt off first, he warns that without changing spending and saving habits, people often fall back into debt.

“The key is, we have to change your decision making, to change your habits, like the diet thing, trying to lose weight. You’re not going to sustain it if you go to extremes. So change your habits, what you eat, what you drink, save, create that habit to save. And then there’s a systematic approach to paying off the debt. You can do both,” Hood said.