Photo of Rebecca Hanlon, owner of Our York Media

Balancing Act: Paying Down Debt versus Establishing a Safety Net


It’s a common financial question: Is it smarter to pay down debt or focus on saving?

The strain of the recent pandemic has brought this issue to the forefront for countless individuals and business owners. With sudden unemployment and a drastic reduction in sales, many are relying on savings and credit to see them through these challenging times. So how do you best prepare to weather future financial storms?

Take an interest in your interest.

The answer involves examining your interest rates. Focus on paying off high-interest debt while simultaneously setting up a savings account as a safety net. Establishing a savings emergency fund equal to three to six months of expenses could eliminate the need to turn to high-interest debt in the future.

Not all debt is equal.

The average interest rate for credit cards is between 15% to 19%. That rate is much higher than the interest for a small business loan or a home equity line of credit (HELOCK). Her Traditions Founder and Champion, Carolyn Schaefer notes, “Most homeowners don’t realize that they should be proactive in securing a HELOCK so that they have access to low-interest credit when they need it.”

Meeting with a member of our personal banking team is an opportunity to discuss ways to consolidate and reduce high-interest fees through various strategies; for example, transferring high-interest credit card balances to a card with a 0% introductory offer and creating a budget plan to stay on track. As always, be sure to read the fine print to understand all of the fees and terms associated with the offer.

Harness the power of relationships.

For small business owner and Her Traditions member, Rebecca Hanlon, a meeting with her Traditions Bank relationship manager allowed her to consider all possibilities. Rebecca is the President of Our York Media, a York-based media company that had to reimagine how to move forward after COVID-19.

“In the first month after the pandemic hit, we lost half of our revenue,” Rebecca shares. “We cut every possible expense, from staff to studio space. With minimal savings and both personal and business debt, we needed a new format to help us.”

Rebecca and her husband and business partner, Will, have a strong relationship with Jamie Reid at Traditions Bank. Jamie, a Senior Branch Manager at the Eastern Boulevard branch, has watched Rebecca and Will expand their business and family. “They are always thinking ahead,” Jamie remarks, “from growing their business to buying their first home, we talk about their goals and ways to structure things in a manageable way.”

Strategy strengthens financial futures.

Photo of Will and Rebecca Hanlon with Senior Branch Manager, Jamie Reid
(Left to Right) Will Hanlon, Our York Media, Jamie Reid, Traditions Bank Senior Branch Manager, Rebecca Hanlon, Our York Media

After a recent meeting, Jamie helped the Hanlons take charge of their plan to increase their savings and pay down debt. They opened multiple accounts to keep their savings and expenses separate. “Previously, we had everything in one account,” Rebecca shares. “This made it too easy for us to spend our savings because it was mixed in with everything else. Now we have an account for our savings, taxes, etc., and it gives us the discipline to not touch those funds.”

Reflecting on how the pandemic has given them a chance to do a better job with their finances, Rebecca states, “This new format is working better for us and puts us in a position to be stronger as a business and as a family.”


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