7 big money myths

Build an emergency fund first

While a nest egg is nice, there are plenty of reasons to direct extra cash toward paying down debt before you pad your savings.

"If you’re paying 25% interest on thousands of dollars, the debt snowballs quickly," says credit expert Beverly Harzog. "Putting an extra $25 or $50 toward high interest debt will have a much bigger impact (on your financial stability) than putting the same amount of money in a savings account."

Paying down debt may also give you more options in case of emergency: You may not have $2,000 in cash for an unexpected car repair, but paying down the balance on your cards can help ensure you have enough credit to get you back on the road.

There is another reason to focus on decreasing debt over stockpiling savings: Unlike, say, a mortgage, which is considered "good debt" and can help build your credit score, credit card balances could drag your score down, Harzog says.

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