I'm 39, nearly $60,000 in debt and have nothing saved for retirement. I don't know whether to aggressively pay down debt — or start seriously saving

For most of Jordan’s adult life, money management wasn’t a priority. He was financially irresponsible throughout his 20s. But he finally decided to get his act together and take his finances seriously. He’s even started budgeting.

The big question he has is what should come first: freeing himself of debt or building wealth for the long term?

Debt rundown

Student loans make up about $20,000 of Jordan’s overall debt. The rest, about $40,000, is high-interest credit card debt. He’s run the numbers: if he is aggressive, he should be able to pay off nearly all of his credit card debt by around mid-2027 if he puts $2,000 per month or more toward it. If he extends that runway, he could be fully debt-free the following year.

But remember, Jordan doesn’t have any savings. His employer offers a sponsored 401(k) plan with a 5% match, but he can only start contributing next year.

So, what’s his best course of action? Here are some options to consider.

Establishing a small cushion

One thing Jordan probably doesn’t want to do is fall further into debt. That’s where an emergency fund comes into play.

Emergency funds are meant to protect us in case of an unexpected expense or job loss. He could start with as little as $1,000 and grow it over time. Experts typically recommend saving up three to six months’ worth of expenses.

Getting that 401(k) match

Whether Jordan decides to focus on paying down his debt or start building his nest egg, one thing he should absolutely consider doing is participating in his employer’s 401(k) match program once he’s eligible.

Not only would contributing to a 401(k) put money toward your retirement, but any matching funds you receive from your employer is essentially free money. Matching programs are a great way to build a nest egg.

Focus on debt or savings?

Should Jordan prioritize paying off his debt or saving for retirement? Part of the problem with saving while paying down debt is any interest accumulated on the debt would eat into any savings. This is why some experts recommend, in this situation, focusing on paying down high-interest debt. Jordan may want to put his efforts toward paying his credit card debt as aggressively as possible, at least until he’s eligible for his employer’s 401(k) match program. Once he starts contributing 5% of his salary to a 401(k), the remainder he has available can continue to be put toward his credit cards until they’re paid off.

Depending on the interest rate of his student loan debt, he may then want to consider pulling back on how much he puts toward his debt. If the rate is low, he may want to contribute more to his 401(k) or establish an IRA. But as previously stated, as long as Jordan has debt any interest will reduce his savings. There’s also the mental aspect of carrying debt to consider.

Jordan may be in a financial hole, but he’s in a solid position to dig himself out. He may want to consult a financial advisor who can help him develop a tailored blueprint to get out of debt and set himself up for the future. But either way, he can rest easy knowing there’s a path forward to achieve his goals.