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Psychological benefits of using savings to clear debt

edited 13 January at 5:21PM in Debt-Free Wannabe
20 replies 1.2K views
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  • Anno88Anno88
    17 posts
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    Second Anniversary
    I know what you mean !


    I have been slowly and painfully trying to save, and now have about £6,000 in savings YET - I have needed to do urgent redec / repair work on my home but... so reluctant to touch these hard-earned savings of mine that I've done ALL the work on interest free credit.


    Am now trying to have that much more saved up in savings and THEN pay all the interest -free debt off .. before the interest free period ends.


    I just feel worried that I can't gather momentum in savings, and if I use it all, then I'll never get this much saved again …..
  • EimearFEimearF
    39 posts
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    Second Anniversary 10 Posts Name Dropper
    Thanks so much for taking the time to reply.

    I decided to take £3700 from my savings and I had £60 surplus in my current account and pay most of the card off. I know I was earning interest but it was only a few pounds a month and I feel like a huge weight has been lifted off me. Ill be debt free on pay day in less than two weeks after 6 years of stress!!

    I should add a few comments on how I paid so much off so quickly. My situation is not typical.
    I have a very small mortgage (a lot of the debt was from our fixer upper) and eat with parents 6 nights a week which means minimal spending on groceries. We have no children yet, decent wages (for where we live) and I have a second job where I work occasionally for some extra money.
    I haggled with my insurances and TV/internet and mobile providers to get my monthly bills down, which helped chip away. Sold surplus furniture and clothes on facebook and ebay (for a fraction of what I paid for them d’oh)

    I tried to avoid balance transfers on cards I could clear in a few months as interest free cards made me think I didn’t need to clear them. I have to say Dave Ramsey’s approach has a lot of merit as so much is in the mentality as opposed to the numbers.

    This board has helped me stay (reasonably) focused over the last 2.5 years and I am really grateful to those who post their stories and those who provide great advice.
    Light Bulb Moment 13/09/17: Non- Mortgage Debt £42295; 01/04/19: £13645; 01/10/19: £9707; 01/11/19: £5525; 14/01/20: £883
    27/01/20: DEBT FREE!!!
  • EimearFEimearF
    39 posts
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    Second Anniversary 10 Posts Name Dropper
    Anno88 wrote: »
    I know what you mean !


    I have been slowly and painfully trying to save, and now have about £6,000 in savings YET - I have needed to do urgent redec / repair work on my home but... so reluctant to touch these hard-earned savings of mine that I've done ALL the work on interest free credit.


    Am now trying to have that much more saved up in savings and THEN pay all the interest -free debt off .. before the interest free period ends.


    I just feel worried that I can't gather momentum in savings, and if I use it all, then I'll never get this much saved again …..

    I know how you feel. I am hoping that now Im (nearly) debt free i will continue living frugally and try and build up a really big pot of savings so i can fix some of the things that need done in my house and keep a big savings pot.
    Light Bulb Moment 13/09/17: Non- Mortgage Debt £42295; 01/04/19: £13645; 01/10/19: £9707; 01/11/19: £5525; 14/01/20: £883
    27/01/20: DEBT FREE!!!
  • Anno88Anno88
    17 posts
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    Second Anniversary
    Sounds like an excellent plan!


    I found - which I really wasn't expecting! - was how comforting it is to have some savings, however small. I know feel a bit more grown up, and like I have a little bubble of protection around me.
    I wish I'd tried harder to save in my youth!!
    But - I thinks it is - unfortunately - in the genes somewhat!!! My son is just like me, and is so painful trying to educate him. Wheras my daughter takes after the savers in the family and is already accruing a safety net … :-))


    Life, huh!
  • EimearFEimearF
    39 posts
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    Second Anniversary 10 Posts Name Dropper
    Anno88 wrote: »
    Sounds like an excellent plan!


    I found - which I really wasn't expecting! - was how comforting it is to have some savings, however small. I know feel a bit more grown up, and like I have a little bubble of protection around me.
    I wish I'd tried harder to save in my youth!!
    But - I thinks it is - unfortunately - in the genes somewhat!!! My son is just like me, and is so painful trying to educate him. Wheras my daughter takes after the savers in the family and is already accruing a safety net … :-))


    Life, huh!

    I was always a saver all my life.. until i got into debt doing up the house, then it was a free for all! I just kept adding to it because the bank said i could have it. Breaking that mentality was the hardest.

    I was so jittery about giving up my safety net this morning but I am glad i did it.I know in 13 days Ill have made it and clear all those stupid cards!
    Light Bulb Moment 13/09/17: Non- Mortgage Debt £42295; 01/04/19: £13645; 01/10/19: £9707; 01/11/19: £5525; 14/01/20: £883
    27/01/20: DEBT FREE!!!
  • debtfreefrom2020debtfreefrom2020
    26 posts
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    Well done Eimear! What a relief! :money:
    Dec 19 - £12,366 (Barclaycard - £4,677, HSBC - £7,277, Halifax - £412)
    Feb 20 - £11,370 (Barclaycard - £4,457, HSBC - £6,913, Halifax - £0) - 91.9% of SD - EF £50/1000
    NSD Challenge 2020 - 10/41, 24.4% (Target 183/366, 50%)
  • Anno88Anno88
    17 posts
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    Second Anniversary
    Yes - I second that EimearF !
    I'm back to the almost-sleepless nights and the early morn frantic mental calcs as I ponder how much debt I've taken on … I DON'T have enough in savings to actually clear it ALL now.
    Back to hoping my job lasts etc etc Will be very glad and relieved when I'm where you are now!
  • EimearFEimearF
    39 posts
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    Second Anniversary 10 Posts Name Dropper
    Anno88 wrote: »
    Yes - I second that EimearF !
    I'm back to the almost-sleepless nights and the early morn frantic mental calcs as I ponder how much debt I've taken on … I DON'T have enough in savings to actually clear it ALL now.
    Back to hoping my job lasts etc etc Will be very glad and relieved when I'm where you are now!

    Ugh the mental calculations! I was even doing them still today!
    You can get them cleared, at least they are interest free so the problem isnt getting worse!
    Light Bulb Moment 13/09/17: Non- Mortgage Debt £42295; 01/04/19: £13645; 01/10/19: £9707; 01/11/19: £5525; 14/01/20: £883
    27/01/20: DEBT FREE!!!
  • EssexHebrideanEssexHebridean
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    ✭✭✭✭✭
    I'm going to be different and say that I would compromise:

    Open a regular saver account (Coventry have one that is as good as any currently - and accepts £500 a month) and max out what you can pay into that. Then throw EVERYTHING else you have spare at the card each month if it's bothering you. You're right in thinking that if you have savings paying interest and debt that isn't costing anything, then you're better to keep the savings.

    If the worst happened tomorrow, then look at it this way, you'd just clear the debt and be done with it - and that situation will get easier with each month that passes.
    MORTGAGE FREE 30/09/2016 :D
    SOA CALCULATOR (for DFW newbies): SOA Calculator
  • EimearFEimearF
    39 posts
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    Second Anniversary 10 Posts Name Dropper
    I am actually so happy I’ve told both sets of parents and they are so relieved that we will be debt free in the 27th!

    I feel guilty I putting that stress in their lives too. We were so lucky to have them through all our bad choices!
    Light Bulb Moment 13/09/17: Non- Mortgage Debt £42295; 01/04/19: £13645; 01/10/19: £9707; 01/11/19: £5525; 14/01/20: £883
    27/01/20: DEBT FREE!!!
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