After you have an emergency fund established, be sure to pay off any high interest debt. There are two common strategies:
Avalanche Strategy — pay off debts with the highest interest first. This strategy tends to save the most amount of money.
Snowball Strategy — pay off the smallest debts first, regardless of interest rate. This strategy helps you build motivation and momentum, even if it may not be the most financially efficient.
Not all debt is bad. For example, if you have student loan that's at a low 2% interest rate, you could just make minimum payments. This assumes you'll invest the amount saved and your investments will earn more than 2% returns. But there's also an emotional consideration to being debt free, so feel free to pay it off too!
Check out Simple Dollar's In What Order Should I Pay Off My Debts?. for different strategies.
Read NerdWallet's How to Use Debt Avalanche for more on the most efficient way to pay off debts.
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