• When I decided to pay off $80,000 in debt a few years ago, I first thought that I would have to be completely financially solvent before I started investing for retirement, but realized that I couldn’t wait any longer.
• Now that I’m on track to pay off all my debt in 2020, I’m very happy that I decided to take a two-pronged approach to financial health by paying off debt and investing.
• Aside from the cold, hard numbers showing that retirement savings have made me thousands of dollars, there’s an emotional high to knowing that I’m not as inept with money as I thought I was.
• SmartAsset’s free tool can find a financial planner to help you balance your own financial goals »

I always assumed invest in the stock market was something you did when you were rich — or at the very least, had a positive net worth. I didn’t grow up learning much about stocks; all I remember is saying to my grandmother “Disney” when I was asked what stock in the company I’d like to give as a gift (smart move, young me).

So when I made a serious decision to pay off $80,000 in debt – including credit cards, back taxes and personal loans — a few years ago, I first thought that I would have to be completely financially solvent before starting to invest.

After all, if the vast majority of my debt, excluding personal loans, was earning interest charges, wouldn’t it make more sense to eliminate it before trying to build up my savings and retirement?

When I Turned 40, I Couldn’t Ignore My Retirement Savings Anymore

Turns out it’s not that simple. For almost two decades I let my debt simply exist, a dark cloud hanging over me whenever I thought about “the future” (in quotes because it was always a fuzzy concept over decades future, rather than, say, “the next five years”).

But when I turned 40 four years ago, I realized I had to get my money act together or I’d have nothing to live on. when I wanted to retireor at least reduce my hours.

So, with input from my boyfriend and family members, I started investing in a traditional IRA, contributing the maximum for most of the past four years (one year I was only able to contribute $3,000). I was skeptical at first, because this money could have been used for my goal of being debt free. But since I had started saving for retirement so late in life, and had foolishly cashed my 401(k) in my twenties without understanding the long-term implications of this decision, I knew I would need all the help I could get to build a nest egg.

I’m glad I didn’t invest every dollar in my debt

Now that I’m on track to pay off all my debt in 2020, I’m very happy that I decided to take a two-pronged approach to financial health by paying off debt and investing simultaneously. The contributions of $3,000, $5,500 and, this year, $6,000 that I made to my retirement account never seemed like huge sacrifices because I set aside that income and knew before until it reached my bank account that’s what I would do with it. My contributions mean my retirement account is now worth almost $30,000.

Cristina Guglielmetti, CFP and president of Perfect future planning, told me that “financial planning is rarely about numbers”. While the math is important, when you’re paying off debt of any kind and deciding how to deal with it (like choosing between debt snowball and avalanche method), Guglielmetti said you also have to look at “the human side of the equation.”

What she means is that there’s a mental reward to seeing your debt go down, and it’s also important for staying motivated to keep paying it off. In my case, the “human side” means I feel inspired when I see both my debt shrink and my retirement savings grow.

While this method doesn’t work for everyone, she told me it makes sense. “You’ve done the self-examination necessary to understand that as long as there’s a plan in place to pay down debt that you can meet, it makes sense to prioritize long-term savings as well,” he said. she declared. “Once you are debt free, it will be much easier to just increase pension contributions, if that is your choice, because the work has already been done and you are already motivated.”

For those in a similar position, Guglielmetti said there are tax advantages to saving in an IRA, “either the current tax relief of contributing to a traditional IRA, or the future tax relief from Roth contributionsShe noted that since growth in either type of retirement account is tax-exempt, “it will likely offset the extra interest you pay by dividing the dollars.”

I learned that I’m not hopeless with money – I’m just learning

Aside from the cold, hard numbers showing that retirement savings have made me thousands of dollars, there’s an emotional high to knowing that I’m not as inept with money as I thought I was. After two decades of financial disaster, from declaring bankruptcy to racking up more credit card debt afterwards to the aforementioned 401(k) cashing, I had the idea in my head that I was just bad with the money, and always would be. I thought it was a personality flaw that would be with me forever.

While paying off so much debt has also shown me that I’m capable of change when it comes to finances, it’s growing my retirement savings that has contributed the most to my outlook on money. I don’t think I’m hopeless anymore when it comes to personal finance. I see myself as someone who has just learned the ins and outs of a whole new language. It’s like going back to college, but for learn to be financially responsibleand one day, maybe even rich.

Also, now that I’m used to funding my retirement account every year, it won’t be difficult to keep contributing to it once I’m debt free. As Guglielmetti said, “The growth you’ve seen in your investments actively helps you stay on target.”

I had to learn to forgive myself for all those money mistakes I made. I won’t really have made peace with my financial past until I’m debt free, and while I wish that day was now, I have faith that I will get there very soon. And when I do, I won’t be starting from scratch – I’ll have tens of thousands of dollars waiting to be turned into hundreds of thousands.

SmartAsset’s free tool can find a financial planner to help you balance your own financial goals »