Tori Dunlap, founder of Her First $100K, a financial advice blog, agreed.

“One of the most common questions I receive: ‘Should I save first, or pay off debt first?’ If this year has taught us anything, it’s the importance of saving an emergency fund. So even if you have a good chunk of debt, prioritize saving three months of living expenses first,” Mr. Dunlap said, adding that she used a savings surplus this year to increase her emergency fund to a year’s worth of expenses.

And where should you put that money? In a high-yield savings account, like those offered by many online banks, like Ally or Marcus. (A high-yield savings account is one that offers a higher interest rate than typical banks. Here is a good place to see which banks are offering the most, though don’t expect to earn much.)

Step 2

This isn’t the most glamorous path, but it is the one that will offer by far the highest returns. After padding your emergency fund to a comfortable level — around six months of expenses, give or take — consider putting any extra money you were able to save toward debt with interest of around six percent or higher, experts said.

Carrying high-interest debt makes the magic of compound interest work against you: Whereas in a savings account, the more you save the more interest you earn, with high-interest debt, the more money you owe the more interest you owe.

“You have to get very aggressive with high-interest debt, because the problem

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