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

true27

Agreed also - I don't know where I would have been without my emergency fund this past 12 months. Building this back up has become as important to me as maintaining my DMP payments.

edmund_blackadder

I'm not going to spend the savings on the debt ... I'm just going to stop contributing to the savings but instead put those future contributions towards the debt.

savingmummy

I think people have got a bit confused!

Edmund good luck this worked for me and i got debtfree 18months early x

DGJsaver

savingmummy wrote: »

I think people have got a bit confused!

Edmund good luck this worked for me and i got debtfree 18months early x

Your situation could be VASTLY different from the people you `advise` , that why it`s dubious advice..... , i think it`s you who may be confused ?

Someone could owe £100 or they could owe £100k....your advice is coming across very generic....

kilgore1080

debtdesperado wrote: »

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....

I wholeheartedly agree with this. I've had a bad experience with throwing all spare money at debt (following the advice on here no less):
Basically I had £2000 saved and having found this site I followed the advice to use savings towards paying off debts, so I paid £2000 off my personal loan, great I thought, until 2 months later I got made redundant. Because I'd used my savings to pay off some of my loan I ended up having to use credit cards and overdrafts to see me through to getting a new job whereas if I'd still had that £2000 in the bank I'd have been fine.

Now even though I've still got a couple of debts the priority for me is to build up that buffer again, I've learnt my lesson and won't make that mistake again.

edmund_blackadder

Well I have only 3k in savings ... this is not going to keep me going for months if I lost my job .... but should see me through most other eventualities, like major car work, etc.

Primrose

Everybody has a different attitude towards debt. Some are happy to live with it as long as they're paying it down regularly, others can't really sleep securely while they owe money to any organisation. Conventional wisdom is that if the interest on your debt is higher than the interest you receive on your savings then it's normally sensible to pay off the debt first. I think with the serious state of the economy and increasing risk of unemployment and redundancy, people are thinking more seriously about reducing their debts while they can so that if disaster strikes, their finances are in better shape to enable them to cope. So while it makes sound sense to keep a reasonable amount of savings in an easy access account for emergencies, you've probably made a wise decision to switch your mortgage over-payment to clearing your double glazing debt. Check with your double glazing financier that you'd not incurring a financial penalty for reducing the loan more quickly.

debtdesperado

I had exactly the same situation as kilgore - having some savings meant I could pay my mortgage and meet my debt payments, so I could keep going on my debt free journey, albeit a bit more slowly. If I had no savings, I would have been taking backwards steps and racking up debt. But edmund_blackadder, you sound a bit concerned so I'm guessing you have a niggling nervousness about keeping some savings... if so, I would say keep them until you feel a bit more comfortable, and then chuck them at the debt?

I think paying everything off your debts is good advice only when the economy is booming and life is good... for everything else there's [STRIKE]mastercard[/STRIKE] :eek: Oops, I meant rainy day savings...:)

misscousinitt

£3K is a reasonable amount of savings for emergencies. If it worrying you, why don't you halve the money you are saving and throw the other half at the debts.

That way you get the best of both worlds. Best to do some number crunching and see how its all going to help.

Good luck with whatever you decide.

vandanfc

Are your savings really savings ? What I mean is, are they the pots of money you should be saving each month to pay for car mot/maint/insurance. Savings for birthday/xmas presents, or other such things.

Would it be an idea to post your statement of affairs and see if it can be cut anywhere ?