Dilemma...

In_Search_Of_Me

OK...have done my first month of being good (still could do better!) and have about 300 in my savings account. WHile I realise that I am paying interest on credit cards I worry that if I have notning saved that I may have to use credit cards which I am avoiding at all costs. In reality I know the answer (pay CC) but there is a part of the new money saving me that is panicking at the thought of using credit card & not having any emergency money left...(NEVER thought I'd say that! ). Probably because I worry that if I do I'll get into the habit of using them again...have other people experienced this & how do I get rid of the fear & pay the money off credit cards without worrying that I'll be destitute with nothing saved? This may seem really silly but I seem to be just "stuck" on this point (been umming & ahhing for days!) and could do with a nudge! Help please my friends!

Broken_hearted

I always say go half/half then you have the best of both worlds.

sammy115

Hi fishface

I was thinking along similar lines last night. At the moment we have two salaries coming in. I am using these two salaries to pay all bills and debts and then just living off weekly child tax credit and child benefit. A struggle but has to be done if I am to achieve my target debt free date. However, last night I couldn't decide to pay just minimums off my cards until end of month when I can then throw all surplus at debt OR throw all at debt until both salaries gone and then go back to living on weekly income.

Plus side with first scenario is that if an emergency comes up I have the money and don't have to use a cc. Second scenario is that I will not be tempted to use any surplus money on treats (which knowing me if I have any spare cash I may do that just now). I am a fairly new money saver and the money saving has not yet become a habit, it is still a well thought out response.

I am not sure of the answer, but I would be tempted to put all cash onto debts now and not have savings. If you do have an emergency you can put it on a card. (whilst not the best scenario in the world at least it would be an option and it would be for an emergency)

Spirited_2

Strictly financially it is better to put it towards your debt. If an emergency comes along then you can use your credit card, and if it doesn't then you've saved yourself some interest.

I do understand that it doesn't feel like that though, and may be impractical if you have chopped up your cards into a zillion pieces.

Ali-OK

Yes, gone through the same dilemma here.

In the end, decided to add up all the annual bills (car tax, Xmas, etc), divide it by 12 and save that amount monthly, plus a further £50 per month for "just in case" situations.

It still means I'm overpaying my debts by £200 a month, as well as having something to fall back on if needed.

I guess most people will say if your debt APRs are higher than interest from savings, you should throw everything at your debt, but with only me and DS I want to build a little cash pile just in case something happens (like accident, redundancy, etc).

oops_a_daisy

Another suggestion. If the payment dates on your credit cards are not for a few weeks keep the money in your savings and transfer it just before a new statement comes out. That way you will still pay off extra on the cards but have the reassurance of the money in your savings account. Ultimately it is best to pay off your credit card because it is costing you money to keep a balance on it. I think all of the above sugestions are right but it is up to you what you decide. All the best.

In_Search_Of_Me

Thanks for all the above...has anyone who has been here used all money to pay savings & then had to use CC? If so was there the temptation to continue spending? I think (just from the fact that by thinking about using CC makes me feel anxious now!) that I would just use my one remaining (I did cut them all up & then got one back for dire emergency but leave it at home!) one in an emergency...bizarre to have such a dilemma when my motto used to be, with wild abandon, "just put in on the credit card" - how things change in 2 months!! I have saved £150 a month for vets/birthday/emergency/car repairs etc but am getting into this paying CC off that I want to pay max off! Ahhhh!

In_Search_Of_Me

Update...after much umming & ahhing have decidedto leave 200 in savings & pay the rest into cc...if dire emergency can use 400o/d & still not have to use credit card! Thanks for all your help...who'd have thought using SAVINGS would every be a dilemma - possibly because I never had any before?!!

CosmoCat

fishface-69 wrote:

Update...after much umming & ahhing have decidedto leave 200 in savings & pay the rest into cc...if dire emergency can use 400o/d & still not have to use credit card! Thanks for all your help...who'd have thought using SAVINGS would every be a dilemma - possibly because I never had any before?!!

good best of both worlds solution, i think. i always have this discussion with my mum, and whereas i always encourage her to put her spending away in debt, i always feel a little hesitant about doing it myself. well done for doing something at least. i'm sure you feel alot better now.