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You want to have money saved in case you have a financial setback. But when you’re carrying credit card debt, should you use your extra cash to pay that debt down first?

On the one hand, the longer you take to pay off high-interest credit card balances, the more it costs you in interest. On the other hand, without savings to fall back on in an emergency, you’d probably have to turn to your credit card anyway, which would only redig the hole.

It’s a common conundrum — even when the U.S. cost of living isn’t creating the financial squeeze that it is today. Between surging gas prices, rising electric bills, and food inflation, there’s a lot competing for each paycheck.

In fact, only 47% of U.S. adults surveyed by Bankrate in December said they would be able to cover a $1,000 emergency expense without borrowing money or cutting back on something else. And 29% said they had less in their emergency savings than they did a year earlier.

So what?

When you’re juggling debt and rising costs, it’s hard to feel financially prepared for anything, let alone a layoff or sudden expense. But having a clear plan — with numbers — can help you chip away at your goals.

Brian Walsh, the head of financial planning at SoFi, recommends a starter kit approach. First, save enough to cover one month’s worth of basic living expenses (while still making your minimum credit card payments, of course). So if your rent, food, utilities and other essentials total $3,000 a month, that should be your target.

Once you’ve got that much saved, switch to putting any extra cash toward your credit card(s). Return to saving only after you’ve paid off your balances.

“For most people, credit card debt should be the first priority because it can become such a slippery slope,” said Walsh, a Certified Financial PlannerⓇ. “The exception is if you don’t have any emergency savings at all. You need that financial airbag to absorb any initial impact.”

Paying off your credit card debt

Credit card balances can become especially difficult to escape because interest charges continue compounding in the background. If at all possible, switch to using only debit cards or cash until you’ve paid off your balances. (Because it’s a lot easier to dig yourself out of a hole if no one’s throwing dirt back in your way.)

Walsh also recommends paying off one card at a time so you can easily see your progress — and stay motivated. (Just keep making minimum required payments on every card.) It’s also worth exploring whether consolidating your credit card debt with a personal or home equity loan could lower your overall interest costs.

Working on your savings

It may take some time, but once you’ve paid off your credit card debt, take a moment to congratulate yourself. If you can avoid falling back into a debt trap, getting rid of this burden can pay dividends for years to come.

Then turn your attention to your emergency savings. Generally speaking, you want to work toward enough to cover at least three to six months’ worth of living expenses. If that number feels impossibly far away, give yourself some grace. You don’t have to do it all at once.

“A lot of people feel pressure to solve everything immediately,” Walsh said. “But building financial stability is usually a slow, steady, step-by-step process.”

A few ways to make the saving process feel more doable:

•   Even if it’s just $25 per week, set up an automatic deposit straight from your paycheck. (SoFi’s free budget tool can help with this.)

•   Open a high-yield savings account (like SoFi’s) to maximize the interest you’re earning on your savings.

•   Review your expenses to see where you might be able to cut back, even a little. Monthly subscriptions are low-hanging fruit: $10 a month might not seem like much, but if you find five services you barely use, that’s $50 that can go straight into your savings.

•   If you get a raise, put half of it straight into your savings — before you even feel the difference in your take-home pay.

Related Reading

•   Sallie Krawcheck: Building an Emergency Fund Before Paying Off Your Credit Card Debt Is Bad Advice (CNBC)

•   What Is Debt Consolidation and When Is It a Good Idea? (Investopedia)

•   5 Things to Do If You're Worried About a Recession (SoFi)

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