To save or not to save

Shelleyphant

Hi all,

I've been in debt for some years and have had to make do with the minimum payments for some time paying off a bit extra when I'm able to. I'm in the position now where I pay off my personal loan on Friday :T and will be 100 a month better off. I've made a plan to snowball this money with other debts to hopefully be debt free in a couple of years.

Recently I've had to bail out my OH after he made the stupid mistake of missing a credit card payment and not saying anything about it. He is now on a payment plan for it but I have had to lend him £100 to sort it out.

I don't have any savings of any kind whatsoever. I had to take this money out of my monthly income which left me totally broke for the month. It made me wonder if I should be putting money away. I've been throwing every spare penny I have at my debt but have been thinking if I cut back a bit more and forgo the treat I have once a month I could afford to put £20 a month away to build some savings.

Should I be starting to save now or am I best making the cutbacks but making extra payments on my debt?

Pollycat

There's actually an article on the main MSE website that addresses the question in your title:
Here's the link:
http://www.moneysavingexpert.com/savings/pay-off-debts

It might be worth building up a small 'emergency' fund but Martin generally advises that if the interest you're paying on your debts is more than you'll make on savings, then forget the savings and pay off your debts.

atush

I agree with Polly. Apart from maybe a hidden 50 quid or so for an emergency, then yes pay off all your debts then build up savings.

If you haven't previously done an SOA and posted it here, why not do it now. Then we can all help you shave off some of your spending so you can slam those debts down faster ;-)

foxgloves

When we decided to tackle our debts, we threw every spare penny at them to get them down BUT, I have to admit that I did keep around £500 in an account for absolute emergencies. The understanding was that this money was not there to dip into if we failed to stick to our new monthly budgets, or if we saw a 'good bargain' we wanted to buy, it was there ONLY for emergencies i.e car repair bill. I completely support the idea of not wasting resources on saving while there are still debts to pay, but I had seen too many previous attempts to sort out our debts some unstuck because a car service suddenly threw up a problem and a big repair bill. As we had no emergency fund, we would inevitably stick this bill on a credit card. So it helped us to have enough money on hand should another such emergency appear. Apart from that, though, every spare penny inc. money made from ebaying, knitting, selling stuff......everything went into reducing the debts.

rdchick

I've just opened a savings account - not to save as such more of a very simple account that I can chuck the excess budget in and to forget about until it gets to a certain amount then use that to pay for the overdraft. I figure doing it this way is better than opening another account as all my debts are serviced on time etc so there shouldn't be a problem xxx

James_saver34

yeah def pay off the debt first!

MattSS

rdchick wrote: »

I've just opened a savings account - not to save as such more of a very simple account that I can chuck the excess budget in and to forget about until it gets to a certain amount then use that to pay for the overdraft. I figure doing it this way is better than opening another account as all my debts are serviced on time etc so there shouldn't be a problem xxx

Is your overdraft interest free? If not you'd be better chucking any excess budget staright at it wouldn't you so that you don't incur interest?

Or at your highest interest charging portion of debt rather