Saving with debts ...? (now includes SOA)

edmund_blackadder

I know this might sounds like a very daft question, but at the moment I am putting small amounts into a savings account each month even though I have a few debts (nothing as bad as some ...but debts all the same.. and certainly more debts than I'd like!).

I suppose I do it because of the mentality that "At least I'm saving something", however I know this isn't technically true whilst I have any debts.

Is there ever any sense in doing this at all, or should I really just throw any money that I am trying to save at the debts instead?

Lokolo

I think its good to get into the habit in saving but if you end up putting a lot into savings (I think a good thing is to have a few months salary in savings for just in case emergencies) then you are losing out on money as debt is usually more expensive than gain from savings.

gonzo127

this depends on your thoughts on things, i personally like to have a savings account for those emergency things that come along every now and then, some people go on the idea of if you pay more of your credit card if something happens you can just put it on that card, the way i look at it

put it in savings - less temptation to spend it
put it on the debt - saves money in the long term (cutting interest)

edmund_blackadder

Good replies, thanks (and kind of confirmed what I guess I already knew).

I don't have very much savings ... but I'm feeling inclined to stop saving for the time being and try and knock one of the debts on the head. The double glazing one is getting on my nerves so have recently swicthed my mortgage overpayments over to that debt (as it has a higher interest rate) ... I'm now going to switch the small savings amounts over to that debt too to kill it off sooner.

Joe_Bloggs

You need a buffer of savings to continue to make your debt repayments in the event of a mishap or temporary change of circumstances. If you can't make a debt repayment then you risk trashing your credit record and collecting bank charge fees that make your debt situation worse.
It is a difficult task and it could be made easier with accurate budgeting. I often fail to budget for unexpected events.
J_B.

savingmummy

I was doing this but when i thought about it it really wasn`t helping me.
I used my savings on my debts (only small ones though), then had very minimal debt amounts owing. After just one month i paid them all in full and am now saving for real

It is good to save and get into the habit, BUT if you have x amount sitting there doing nothing and x amount needing to be paid you may as well pay x off!

I would be inclined to stop the savings for now, pay the debts and then once you have no debts you can save x

savingmummy

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

This is helpful regarding saving with debt x

edmund_blackadder

savingmummy wrote: »

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

This is helpful regarding saving with debt x

You're right... that is helpful!

edmund_blackadder

savingmummy wrote: »

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

This is helpful regarding saving with debt x

I'm hoping this one will be useful too http://www.moneysavingexpert.com/loans/cut-existing-loan-costs

I'm off to have a look ...

debtdesperado

Hmmm.... I don't agree with the MSE 'chuck everything at your debt' stance because think it depends on your circumstances, and how your debt has to be repaid.

If you are in any, even vague, danger of being made redundant = keep some savings as if you are made redundant, the aim is to keep making minimum payments and stay above water. If you have a large amount of savings, if you get made redundant you can always decide at the time to pay off all your debt or to keep hold of your savings in case you are out of work for a while.

Even if your job is fine, you could throw all your money at the debt, but then the boiler breaks or your car breaks etc or your mum who lives in oz suddenly gets ill - any sort of expense that would cost a few thousand to fix but which you couldn't find immediately and would have to go on credit card = better to keep some money saved to cover this. If you don't own a property and you don't drive and have no family abroad, there may be no 'emergency' expenses that could arise, in which case, go ahead and throw all your money at the debt.

I think it's better to build up some savings - my debts are all on loans, so I can't make overpayments, but I have savings for emergencies which I always contribute to, but as soon as the amount saved equals the amount outstanding on a loan, I'm going to pay the loan off early and then keep saving. As a rough guide, I would say that if you feel the need to keep an emergency credit card, you probably would be better having the savings and then shutting the credit card on the basis that there is no need to get into debt again ever....

DGJsaver

agreed , advise of throw everything at the debts is dubious , at best.....

given some massive corporation your last pennies , to dig into a large £££££ debt aint gonna help when the exhause falls off the motor.....

every situation is different , people should realise that....