Do you have savings and debt?

Caroline73_2

Roves - I get what you are saying!

However I keep £1000 in my son's savings account (the CB goes into there directly) just in case. I know it would make sense to pay off my debt but it's a psychological thing that I have savings.

I am earning pennies interest on the savings but it would save me £'s in interest. I know what you mean!

SarahNeedle1872

But if the emergency you have means that you need cash, you'd be worse off because you'd have to draw it off the card at silly% interest.
It makes financial sense to pay it off the cards, but I for one feel better knowing that I have instant access to cash if I need it..... and thankfully I have the will power not to spend it. I have a DS that I need to take to his Nanny so that I can go to work... no childcare = no work for me = no money! Thankfully our mechanic is a cash only kinda guy who is a family friend

Flower08

Tickets will be about £400 each my me and OH (so £800) will be booked in probably May, we dont have to pay for accomadation as we stay with relatives but about £200 will be travelling to airport, hotel at airport etc then about £500 for spending money.
I am willing to give anyone a chance who can save me money:rotfl:

Flower08

I do see what you are saying yes, but is this not just delaying the interest? I know would save £80 as you have demonstrated (by the way you explained that very well!!). It is something to look into, hmm you have got me thinking now!!
But i think like others have said it is perhaps a bit of a psychological thing, knowing i definatly do have the money for my holiday!
Thank you for taking the time to explain it to me

crazyhazy

We have savings at the moment as well as debt, about £1200 in savings which we're currently debating what to do with, I like to know I have cash there should we need it and we do need a new washing machine but I think once we've got that we might pay some off our debts and maybe just leave £500 for emergencies.

Flower08

Yes i do see what you are saying actaully, it is definatly something to think about as that £80 would pay for something like council tax for a month.
Thank you!

mooomin

roves1 wrote: »

Thanks, but if you pay off £100 from the Barclaycard, you'll save interest now, and if something breaks, you'll still have the Barclaycard to fall back on. Even if you spend the whole £100 in 6 months time, you'll still be about £5-£10 (guessing) better off.

I'll have to look up the PAD challenge:T

http://forums.moneysavingexpert.com/showthread.html?t=1079175 The PAD (or Payment a Day) challenge can be found here. I have found it really helpful for motivating me to pay off more of my debt more quickly.

Thankfully, my Barclaycard is interest-free at the moment, so I can have savings and make regular payments to it. I have about another 12 months interest-free as I got a long balance transfer period. I have already more than paid off the balance transfer fee.

If I get to the last month of the interest-free period and still have a largeish balance (Over £100) then I will absolutely use my savings to clear this. I think that in my case, with the PAD and the Sealed Pot Challenge (For next year's Christmas costs) I will not need to do this.

I am using this website so that I don't end up having to have a card to fall back on, and if I spend on my card I will soon be charged interest as the 0% offer didn't apply as generously to purchases!! I definitely fall into the group of people who prefer to have a small cash cushion :rotfl:

Thanks for clearly explaining the benefits of using savings to pay debts though :T

mooomin

roves1 wrote: »

If you've only got 0% debt, save away, you could make £40-50 per year if you have it in a decent instant access savings account, it all helps. Sealed pots pay nothing though;)

I've started my own little DFW diary tonight, and you will note from this that I also have some very firmly not 0% debt. I was using my Barclaycard as an example.

I am going to be making strides towards my other debt over the course of the coming year though, it's just my small amount of savings will make a minimal impact on the overall debt at present. The psychological impact of using my overdraft (as opposed to my expensive credit card) for a small household emergency would be too much for me, as seeing that red figure climb is the worst part of having the overdraft debt to me.

Again, although Sealed Pots don't pay any interest, I find them very motivational. I may not be earning any interest (not that many savers are at the moment!) but I don't just have to put cash in them. As of the New Year, I am buying shopping vouchers from my employer to save up for Christmas, and when these come through the door they are also going in the Sealed Pot to hide them from temptation. My plan with the Sealed Pot is to have more in it at the end of the challenge than my target (Currently £150, to pay for Christmas) and to use the festive surplus in this pot to clear some more debt.

Although it might make sense for some people to clear their debts and have no savings, I like knowing that I have a small amount of money in credit somewhere so that if disaster strikes, I'm not back down the slippery debt slope again

LilacPixie

I have had a thought. creditors are reducing the amount of available credit a debtor has across the board it seems. Say you have 1k on a card and £800 in a non interest baring account waiting to pay something important in 6 months time, car tax, insurance, MOT something like that.

They take the advice of its ALWAYS better to pay of a debt unless its interest free and then then the creditor decides to reduce your credit limit/remover your overdraft accordingly. I think some would them be forced into more expensive borrowing.

To be honest in these uncertain times I think people should only overpay what they can afford to no longer access KWIM.

PaulS43

roves1 wrote: »

Conventional wisdom says that you should not save if you are in debt, but many do.

(It's a private/secret poll, your name doesn't show up if you vote).

I accept this wisdom - but were I not to have saved my tax money in an online ISA, then cometh the end of January and the calling of the Inland Revenue; not having their anticipated £2,000 could well land me in prison and / or having my house siezed and sold at auction, etc!

Other than these savings for tax - I don't have savings, if you see what I mean. Perhaps the poll's question could have included this option too because whilst I answered "yes I have savings and I have debts" some others in exactly my situation will have answered differently.