Do you have savings whilst paying off your debts?

Jo_R_2

Quick Q, not so much of the principles of saving-versus-paying-off-debts but more what people do personally.

Do you have savings whilst you are paying off debt, and if so, what sort of figure do you have saved, and what is it for? Or do you not have any as you prefer to put every spare penny towards paying off debt? Or c) other LOL?

Currently I am slowly working towards paying off a number of debts, but have no savings. However as I have been working out a new SOA I have decided to start putting aside some money. Previously we have been living hand-to-mouth with nothing to back us up and tbh I am sick of having to borrow or call on people when we need money for something outside of our budget.

We are currently looking for a bigger rented house and are aware that when we find somewhere, we will be needing to pay various fees upfront, and so this is one example of why I want to have some money aside separate from paying off debt.

What about you?

LilacPixie

I have around 4k in 'savings' firstly some of that amount is our emergency fund but the majority is because i want t clease a loan that does not allow overpayments so I save instead.

posted_2

If you are upto the limit on the overdraft, that is usually a good place to "save", and use as a source of emergency funds.

mooomin

I am throwing all my money at my Barclaycard at the moment, as there is only about £380 left to pay and I'm sick of the sight of it :rotfl:

I do have about £400 in savings at the moment and will be adding to this despite having a loan of over £6,000. My loan doesn't allow overpayments, so my "savings" will eventually pay off this loan early.

The advantage of doing this is that if anything goes wrong in the house I will hopefully have enough funds to cover it rather than heading to credit cards etc.

Some people are quite evangelical about paying every penny towards your debts, and it does make sense for some, but I want my emergency pennies!

Buffythedebtslayer

I am saving 25 quid each month for Christmas otherwise it goes on the CC and I start Jan all miserable!

I also save in various pots (2,5,10, 50 p etc) to use to pay off debts at the end of the year.

As a rule you aren't supposed to and it does make sense to pay off debts without penalty but I know Christmas will be a disaster with out savings!

xxx

tiff

There is an American financial guru called Dave Ramsey who advises to save an emergency fund of $1000 whilst paying off debts. This is so you have something to fall back on if you have a big car bill, rather than putting it back on a credit card. I've been trying to save small amounts each month whilst paying large amounts off the credit card.

posted_2

That just means you end up paying more interest with no benefit.

Another Guru, (Martin) has a more rational view

http://www.moneysavingexpert.com/cards/pay-off-debts

The something to fall back on is the credit available on the credit card or overdraft which has been freed up by paying it off.

BabyBetty

Hi Tiff,

I listen to Dave Ramsey, every week. He's quite radical about dealing with debt and I must admit he got me started on the road to deciding to get out of debt.

I have an emergency fund of £3000. I am trying to top this up to £5,000 by the end of July when my contract at work is due to come to an end. I am not sure how long it will take for me to get another job - that's why I need this to cover the bills. I still have a long way to go on paying off my debt and still making regular payments of over a £1,000 a month even though I have had to slow down a bit.

BB

Fire_Fox

My debts are student loans which I don't have to pay until I am earning enough, student overdraft and (disputed) service charge at 0%. Therefore I am working on having enough savings to offset my debts as and when I need to pay some off.

Numpty_Monkey

I think having an emergancy fund is essential, it depends on each person as to how much
I have £400 incase the washer goes bang or such,

SarahNeedle1872

I save £200 a month in what I call my 'monthly saves' which are for car stuff (tax, ins, maintenance), christmas, birthdays, holidays, hair cut, clothes, DSs clothes, and house maintenance because if I didn't, I would only put stuff on the CC and be back to square one! I also have a £500 od on my current account which I can use if I need to.
I put £10pm into a high int acc for DS, because I never top up his CTF.
I also save £2s, 5ps, 2ps and 1ps, and they all go towards the debt.

posted wrote:

That just means you end up paying more interest with no benefit.

Another Guru, (Martin) has a more rational view

http://www.moneysavingexpert.com/cards/pay-off-debts

The something to fall back on is the credit available on the credit card or overdraft which has been freed up by paying it off.

Totally get what Martin is saying, and what you are getting at, but many of us close accounts once they have been paid off to avoid further temptation in future.
I guess its a personal choice, for some the knowledge of having a few hundred quids as an emergency fund is more valuable than saving a few quid in interest IMO

Sx