To save or not to save?

Mrs_J_3

Hi All,

Need a bit of advice!

I'm currently paying off credit card debts and trying to cut back on spending etc. However, I know that I need to pay my sofa in Sep, and I have car insurance, service and MOT in December aswell as Christmas.
Currently I save £75 a month to cover stuff like this, but my dilemma is:

a) up my savings to £100-150 (got a small payrise to cover this) to make sure I have enough cash to cover all of this and so prevent the temptation to put it on the cards, or
b) do I put the extra money into paying off the debt, but run the very real risk of struggling to pay sofa, insurance etc.

I know I should put debts before savings, but feeling a little trapped in a viscious circle at the moment. If I do save, where should I be putting the money? What do you guys think?

Sillychuckie

Is the interest on the debt costing you?
If so, pay it off.. You'll never earn more than you are paying in a savings account.

richgirl

Whilst I agree its good to pay off your high interest debts first before saving, it can also be comforting and useful to have an emergencies fund, which in your case would suggest say around £500.

Robert_Sterling

If the interest rate on the credit cards is greater than the interest rate on your savings after tax then

PAY OFF THE DEBTS

cloud_dog

I agree with the rich girl. The OP has obvious concerns about meeting big future bills and with the possible stress of worrying about covering these almost essential bills I think you would be better off building an emergency fund. Of course you could do all of this at the same time, alittle bit here a little bit there, etc, etc.

The important thing will be to remain disiplined and once you have your emergency fund channel all your available cash into repaying your debt (highest interest rate first).

Not sure what debt you have got but if it (some) is credit card is it on a 0% deal? If not why not transfer it to a 0% deal - this way your repayments will be paying off more capital rather than interest. Ignoring balance trancer fees for the moment, any of the MBNA CC are useful as they only require a minimum repayment of £5pm. This would allow you to build up your emergency fund more quickly so that you can then get back to focussing on repaying your debt.

cloud_dog