Use my surplus to pay off debts or saving goals

Greg89

I take home just over £1500pm, DD and debt repayments, food, travel, rent.

I live with my parents so very low rent.

I have a surplus of £590 each month.

I was told to use that to pay off debts.

However how much should I save per month if you was me, based on my income, how much would you put towards holiday day each month and days out?

Grumpelstiltskin

A quick question.

What interest rates are you paying on your debts?

What interest rates could you earn on your savings?

SusieT

Your holiday should be the total cost including spending money divided by 12 so that there is enough saved to cover it in full. Some people I know divide it by 10 and save that amount every month, so that if they are hit by an unexpected price rise at the last moment, or have to make alternative arrangements they have a buffer there. It is not a case of how much should you save, its more how much do you need to save so that it can be paid in full.
With the debts, it is normally better to pay them first as the interest is normally more than the savings rate, but adding to the above, even though you live with family, do you have an emergency fund saved as that will help you if you move out at some point as it will be there if the car, washing machine etc go bang, or if you were to lose your job. 

foxgloves

I would start putting a modest amount away to start building an emergency fund if you don't currently have one. Aim for £500 first, which would help with an unexpected car bill or similar. But I think you need to prioritise getting rid of your debts as soon as possible, so that all your earnings will belong to you, instead of being top-sliced each month to pay debts, which does soon feel like 'dead money' the longer paying-off time lasts since buying the item, whatever it was. When your debts have gone & all your money is your own, I'd work on building the emergency fund to £1000, then slowly but steadily towards 3 months of wages to help you in the event of a redundancy. 
I can tell you from experience that the transition from having significant debt (which we did) to no debt felt like we'd given ourselves a pretty decent pay-rise. It's well worth doing.
I found the following mantra helpful ...."If I have to put it on a credit card, go into overdraft or take out or extend a loan to pay for it, that's not my money, that's somebody else's, so I obviously can't afford it". The only exceptions to this imo are a mortgage to buy a home, a loan to buy a reliable car if needed for work & for training to improve job prospects. Everything else should be budgeted & saved for.
Good luck with your mission!
F

Greg89

Thanks everyone 

TheAble

I'd also focus on getting the debts paid before thinking about holidays. Have the holiday once the debts are paid off.

kimwp

You shouldn't live a life of no fun, but debts before holidays. If you need to move out, or your parents need help, it wouldn't have been good to have frittered your money on holidays instead of getting into a better financial situation.

Greg89

Thank you guys again.

I was thinking of:

-£250pm save

-£150pm emergency fund 
-£100 holiday 

-£90 entertainment/outings 

Greg89

foxgloves said:

I would start putting a modest amount away to start building an emergency fund if you don't currently have one. Aim for £500 first, which would help with an unexpected car bill or similar. But I think you need to prioritise getting rid of your debts as soon as possible, so that all your earnings will belong to you, instead of being top-sliced each month to pay debts, which does soon feel like 'dead money' the longer paying-off time lasts since buying the item, whatever it was. When your debts have gone & all your money is your own, I'd work on building the emergency fund to £1000, then slowly but steadily towards 3 months of wages to help you in the event of a redundancy. 
I can tell you from experience that the transition from having significant debt (which we did) to no debt felt like we'd given ourselves a pretty decent pay-rise. It's well worth doing.
I found the following mantra helpful ...."If I have to put it on a credit card, go into overdraft or take out or extend a loan to pay for it, that's not my money, that's somebody else's, so I obviously can't afford it". The only exceptions to this imo are a mortgage to buy a home, a loan to buy a reliable car if needed for work & for training to improve job prospects. Everything else should be budgeted & saved for.
Good luck with your mission!
F

Can I politely ask how much your debt was and how much percentage of your monthly income you put towards it to get this paid off?

[Deleted User]

Hi,
It would depend on how much debt you have and your income. Also depends on your ideal goal such as a deposit for a house? Move out, rent? It's ideal to have some emergency fund, especially if you rely on a car for work etc.  But ideally, I would concentrate on paying off the debt then save for a holiday after.  As much as we all work incredibly hard, a holiday is still considered a luxury.  I'm currently paying off a debt this year, not holidaying this year but planning on days out and stay with family.  It will be a quiet one but so worth it to finally sleep better at night.

kimwp

Greg89 said:

Thank you guys again.

I was thinking of:

-£250pm save

-£150pm emergency fund 
-£100 holiday 

-£90 entertainment/outings 

And none of the surplus towards paying debts?

What are your debts? (Totals, minimum payments and aprs?)