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| Tue, 08-17-2004 - 8:45am |
So, I'm wondering how to get back into
debt repayment mode. We have a little bit
of savings right now (about $700). And, like
I mentioned below, we have an open Home Equity
line of credit ($0 balance, but it can be accessed
like a savings account at any time). I've been
saving about $200 a month (but usually take some
out here and there).
debt repayment mode. We have a little bit
of savings right now (about $700). And, like
I mentioned below, we have an open Home Equity
line of credit ($0 balance, but it can be accessed
like a savings account at any time). I've been
saving about $200 a month (but usually take some
out here and there).
Should I use our savings and put that toward our
student loan (right now at $4200)? I really want the student
loan paid off by the end of the year and it's going
to take a serious effort for us to get there. Should
I stop the $200 saving and put it toward the student loan?
I guess my theory is that, in case of a true emergency,
we could use money from our Home Equity line of credit.
Even if it was maxed out, we would be able to make
the payments so there's no real threat of losing
our house or anything like that.
It would feel weird not to have any savings at all,
but it would also feel good to see that student loan
start to drop. What do you think?

I personally wouldn't take the money out of the savings. I know you probably aren't getting a huge amount of interest but for me there's something comforting about having the money in the savings that isn't attached to any sort of credit.
I don't know if any of this helps or not but I hope it does.
med12
When we were working hard on our debt repayment,
we had about $1000 a month to put towards it.
This was when we stuck to a fairly tight budget.
So I know the money is "there",
we just have to buckle down to find it again.
I think that's why it will be a good goal for
me to pay off the student loan. It will make
me focus again, otherwise we won't get there.
I'm still tempted to put EVERYTHING toward the
student loan just to see some change, but I
also hate to be without savings. I don't want
to think of our home equity as "savings" because
it's just another loan. But it IS something to
fall back on just in case. Hhmmmm.
Last week a poster said she was fustrated at how much she had left to accomplish . . . and then she looked back at all she had already done. I was certainly fustrated because I had hoped to start snowflaking to our car, but a sick cat and some school needs thwarted that plan. Then (because of the post) I counted up all the things I had done including paying off all credit cards, paid cash for vacation, started freedom account, started 529 plan and kept contributing to savings.
I know how much those home improvement projects can beckon. I desperately want to finish off the basement. SO I started listing all the junk we were storing in the basement on ebay. This will be the start of the basement fund.
I agree with the poster who said to try replacing a few at a time. Measure your windows and check out the prices at home depot. If you don't feel confident in yours or your DH's abilities, see if there is a local handyman that could do it for a reasonable price.
Good luck!
Sandra
But I wouldn't use the savings to pay it down. Even though it's $700, it's yours and in cash. When I was paying debt, all there was between us and potential disaster was less than $1K but it really helped me to get the debt out the way before something could happen.
As for the line of credit, I still view it as a source of potential debt to use in dire circumstances as their interest rates tend to be lower than the standard credit card rates (not including the 0% - 5% teaser offers).
I know you can find where the "extra" money has gone in your budget, and if you really want to pay down the loans by December you'll find the resources to get it done without dipping into your savings unless its truly needed.
Since we became debt-free we too have managed to lose track somewhat of the $1k and more we had been putting towards debt; I know I spent a lot of money for my dragonboat events/equipment. Starting in September we have made the commitment to really build up our retirement accounts up with this money.
Best of luck to you!
Kassandra
Kassandra
"It is said that life has its peaks and valleys. The challenge is to accept them equally and experience them
I follow the Dave Ramsey babysteps.
1. $1000 emergency fund
2. Debt snowball
3. 3-6 month emergency fund
4. 15% retirement savings
5. college savings (if you have children)
6. Payoff mortgage
7. Build wealth
Since you have the $700 in savings leave it and add the $300 to have your emergency fund in place and only use it for dire emergencies. Then start your debt snowball. Since you only have the student loan you can really focus all your energies on this last debt.
You mentioned staying in debt because it might be comfortable. If you decide to follow the babysteps you have goals to focus on and you won't be an tempted to go back into debt.
Also, instead of depriving yourself and then splurging try setting up freedom accounts for the things you want and need. I have gift, clothes, home repairs, vacation accounts. I've been able to give nice graduation, birthday, and bridal shower gifts with no debt. We took a short trip last week for my DS's girlfriend's college graduation with no debt. I'm going clothes shopping with no debt. Maybe for your windows you could get a free estimate and then decide how many months you could spread out the savings. If you could get by this winter and aim for next August to get the job done then divide the total by 12 and make payments to yourself and earn interest instead of paying interest to the bank.
Nice to have you back.
Julie