Paying off debts and saving at the same time??

ZoeLayla

Hi all,

I am new to the forum although not new to the site (check it every week on my day off )

I am here to see if there is anyone in a similar position to me financially to have some support really. OH does try but he doesn't get involved too much in our finances!

I am kind of in the middle of a major life overhaul. currently off work for two weeks before starting a new career, trying to pay off some debts while saving money too.

We have a loan, 2 cc and and overdraft - all manageable debts but i'm wanting to pay extra and get them paid off sooner rather than later.

Also trying to save some money for getting a house deposit together and then getting married (been engaged a year and still haven't managed to save any money)

I will look at some of the challenges and get involved but just wondered if anyone was in a similar position - saving while paying off debts? Feel like i'm on my own with this one.

Firewalker

I would say that important as it is to buy a house, the mortgage is rather substantial debt. If I were you, I'll focus on paying all my debt first and then direct all the money I was using for that towards savings.

You may find that both paying off debt and saving for your first house works faster that way.

Firewalker

camuk81

Plus the quicker you pay it off the more you save on interest meaning more money long term for the mortgage.

My snowballing and paying as much as I can I've reduced the interest paid from £7,487.18 to £2,179.17 over the life of my debts

cookiedough38

In a similar position, we want to save to buy as house asap but I am paying off my debt before we even consider saving. Its definitely a good incentive to pay off your debt as quick as you can. Even the pennies are making their way onto paying off my cc now.

camuk81

Zoe I noticed from your other post you have credit cards and an overdraft. Work on the highest apr first. That way you will pay more off on the balance then say interest. So per example £1,000 on say a 35.9% apr card the interest is £29.92, where as a 27.9% card its £23.35. So if you pay off £50.00 you can soon see the difference

ZoeLayla

Thanks for your advice. We are focussing on the debts first although saving little bits at the same time. one CC is on 17% and one is 0% so we are paying most off the 17% one first and just paying minimum on 0%. I think I am probably trying to do too much in one go. Great to hear other opinions though

mrsb83_2

We're planning to move asap but we have to get our debts paid off first. It costs you a lot more in the long run to keep debt whilst you have savings rather than paying it off.

You might feel better psychologically if you have a savings pot, but it's a false sense of security. Check out Martin's writings on this point.

DVardysShadow

ZoeLayla wrote: »

Thanks for your advice. We are focussing on the debts first although saving little bits at the same time. one CC is on 17% and one is 0% so we are paying most off the 17% one first and just paying minimum on 0%. I think I am probably trying to do too much in one go. Great to hear other opinions though

Absolutely do not do anything towards saving apart from make sure you have an emergency fund.

Debt is negative savings, generally with a higher rate of interest, So pay down your debt while it has a higher rate of interest than your savings will return. The only other thing to mention is to shuffle your debt to lower interest. So pay for regular bills [eg petrol, diesel] with the lowest rate card you have available and pay the same amount off the highest rate card ASAP.

reallyAnnoyed_2

Let me put it this way - your debts appear on your credit file , your savings don't.

In span of 36 months, what look better? 25 debt free months or 6 months with no record of savings?

Barbeduk

Yep, I'm also on the pay it off as quick as you can bandwagon! You'll never get 17% on your savings.

Good luck, post a SOA if you want any tips on where you can make savings on your budget.

seriousDFW

Agree that it's better to pay off debt before saving -see Martin's article about it.

I found it really hard at the start of becoming DF, as I wanted to save. But I really have turned that around and feel while you're paying interest on debt, pay off the debt before saving.

I have actually started saving now, but ONLY because all of my debt is now on long 0% deals so I know it's not costing me anything, and I can earn interest on the savings AND still pay off the debt before the 0% deal ends, or at least I could use my savings to pay them off.

So if you can get debt shuffled to 0%, save, but otherwise, pay off the debt while it's costing you.