I am a single woman who is making a good salary of 78,000. I would like to purchase a home in the next couple of years, as I have a consumer debt of $20,000 and would like to pay off that first. Would you recommend that I pay the entire amount before I buy a home? I do not own a car and I thought that most people spend 500 dollars or so a month and that is equivalent to the amount I pay each month towards my debt. I have a secure career as a school teacher. So in a nutshell, should I pay off the entire debt before purchasing a home? I currently have 10,000 saved. Thanks so much for your advice and you are a wonderful financial expert!

I believe in having a balanced life, in making small advances over all of your financial plan, not in doing one thing to the exclusion of another. My question is this: If you are a single woman making $78,000 with great benefits, why are you in debt at all?

Okay, assuming some mistakes were made in the past, here's what I'd do if I were you.

1. I'd take $7K of the $10K and pay down my debt. (The other $3,000 is a good start on an emergency fund.)
2. I'd add whatever you were using to save for the house to my debt repayment, and bust my butt to get that sucker paid off in the next 10 months.
3. Then I'd take all the money I was using for debt repayment and save it for the downpayment on the home.

You will have eliminated your interest costs as quickly as possible, and you'll have conditioned yourself to live without the money you're using for debt repayment, so it'll be no test rebuilding your downpayment amount.