What to do with my Savings?

James240

Hi guys ive got £1100 in my savings account

Should i

a) Pay of more of my Loan with all of it or

b) Save it just incase anything goes belly up?


Any advice much appreciated guys

James

skintchick

Have you got anything in your savings already? If you've got a reasonable buffer, throw it at your savings. If not, save it, and if it's in between split it in half!!

Sorry, that wasn't much help was it?

Debt_Free_Chick

James

Loans can be very inflexible and your lender may not allow you to make an extra payment.

You might want to consider continuing to save up as much as you can, until the total of your savings is enough to completely pay off your loan. Then, with no debt or no savings, you can start to save the amount you were before AND add to that the current amount you're paying to your loan. So ... your new savings would build up even more quickly than they are at present.

HTH

James240

hiya DFC

Its an Egg Loan which is pretty flexible and can make overpayments when ever i want.

Do you feel it is wise to keep this in savings just incase anything goes wrong and i need to pay for soem thing or do u think its wiser to pay off a chunk of the loan........................

Many thanks

James

System

If the interest you will be paying on the loan is greater than that you will be getting from the savings, you would be better to pay off the loan.

You could always get another loan at a later date if something unexpected did come up?

R00STER00

It is commonly recommended that you should have up to 6 months income saved as a back up emergency fund.

However, if you feel your job is relatively secure I would probably be happy with a couple of months if I was in your case. Use the rest to pay off the highest, penalty free, interest loan.

skintchick

CAn't imagine ever having six months' income in savings...

Midas

James

As has been mentioned already on this thread, it is generally thought of as good practice to have the equivalent of a few months salary stashed in an instant access savings account as an emergency fund.

However, in your position (of trying to repay quite a large debt), you might be better off overpaying on the loan in order to reduce your interest payments and thus the size of your debt and the length of time required to pay it back. It really depends on whether you have any other form of emergency fund available. can you get a 0% credit card for example? If so, get one and keep it in reserve in case of emergencies, and through everything else at the debt. If not, I would keep at least 2 months salary or about 2k (whichever is greater) in a cash reserve just in case.

Best,
M.

Debt_Free_Chick

skintchick wrote:

CAn't imagine ever having six months' income in savings...

But how would you feel and what would you do if you had no income for six months? It really is a necessity, not a luxury. Although, I think six months might be a little OTT - certainly you need 3 months. And it doesn't need to be 3 months income ... but it does need to be 3 months of the "outs" part of your budget, so you could pay your bills if you had no income e.g. due to job loss, illness ... unforeseen situations ....

Debt_Free_Chick

James

Agree with others. Depends on whether you have any other "emergency" funds, job security.

Re the Egg Loan ... can you draw down more money on that loan if you need it? I know you can with Cahoot, not sure with Egg. Cahoot is a bit like a revolving overdraft, as you pay back each month, but you can draw down on it if you need more money.

If you can draw down on the Egg loan, then pay the £1100 off it. This way, you get the interest down and still have a source of funds in case of an emergency.

Regards DFC

black-saturn

Use your savings to pay off the loan. The interest you get on them is less than the interest your paying on the loan so it's a false economy. Once you've paid your debt off you will find that the savings quickly build up again.