Planning for the future

leiela

Ok so i've sat down and looked at my finances, and the good new's is im "saveable" myself and my husband bring more into the household than we are due to pay out on a monthly basis and we can afford to pay chunks off our debt.

However from past experience i've realised our downfall into debt occures when we have unforseen circumstances or big one off purchases/payments such as car insurance tend to land on credit cards with the intention of paying it off but it never seems to happen.. credit cards build up and eventually we take out a loan to concilidate our debt... BLAH!!... rinse and repeat.

I REALLY REALLY want to prevent this happening in the future... good plan right?? Ok so in order to get straight we need to pay off our current debt, and PLAN AHEAD to prevent future debt.

Great and easy done... a savings account or two for different things can plan for the future, one for christmas's/birthdays/expected payments one for emergancy's and the unforseen.

Super ...

However small problem, working out what we need to save the amount we need to put away in savings to cover these bills is managable, however if we start making these savings now, there won't be much money left over to make much of a dent on our debts, leaving them to get paid off very slowely with only minamum payments.

On the other foot we could hammer the current debts without making savings, so there won't be any savings meaning future purchases and emergancys are gonig to land right back on the cards again. While i imagine we'll do better now we are making a focused effort to pay off the cards and not make any un-needed purchases, our only hope will be that we are paying off the debts faster than we are gaining them??

what would you guys do?? part of me says that paying off the debts first will be better because the quicker we can get those down the less interest we'll pay and each month more and more money will get freed up speeding up the whole process.

But i wanted a second opinion?? should i hold off saving for the future for now?? or save saving in order to prevent further debt in the future??

CLAPTON

the key fact is to control your spending

the isssue of savings via debt repayment is relatively small beer unless you control the spending

so work out that SOA
http://www.whatsthecost.com/snowball.aspx

and monitor the spending... spending diary... monthly review of all spending to compare it with the budget plan... if you overspend one month then you need ot cut down the next.
There is no magic solutions.... just concentrate on the spending.

then whether you save up for the oneoff/yearly stuff or pay off more debt doesn't make a major impact ...

piggeh

I guess it comes down to interest payments. If you have high interest debts, get these paid off quickly, but bear in mind what the interest will be on any cards once you need to make one off purchases.