Paying Debt/Savings

Avatar for travinski
iVillage Member
Registered: 05-21-2004
Paying Debt/Savings
5
Sun, 02-13-2005 - 8:35am
I seriously agree that saving money is just as important as paying off debt. Now I always pay way above the minimum although my balances on two credit cards are enough to make a saint drink. Be that as it may, and I say this from personal experience, when you have a bank balance, your dignity is restored. You feel more responsible and your self-esteem is enhanced. Lowering your bills is another uplifting thing to do but don't throw every cent you have on your savings. Half and half or what others do - a third/a third/and a third.

Travi

 

iVillage Member
Registered: 12-05-2004
Sun, 02-13-2005 - 9:42am

I hadn't thought about this way until we got our state tax refund, and I put it into our savings account, and suddenly, I 'did' feel even better about things. Sure, it's for our vacation in the Fall, and we're going to be adding to it. BUT...if something big came up and we didn't have the extra in our checking account (which I try to do), then at least I have the security of knowing that money is there.

Pat

iVillage Member
Registered: 11-13-2004
Sun, 02-13-2005 - 10:10am
I agree that it is important to do both also. Me personally, I have focused mainly on building my emergency fund; that's my main priority right now. In another month or so, I should have an 8 month emergency fund in place. It does make me feel good and more secure. I don't feel as stressed. I am still paying more than the minimum on my credit cards and once my savings is completely funded, I plan on hitting my debt hard. I know some people don't do it this way, but this is what has worked for me and I feel great about the progress that I have made. Some financial experts say that you should pay off all your credit card debt first since it's a better return on your money since savings interest pays very little and credit card are generally high interest. But I think you have to personalize your plan, something that works for one person, doesn't necessarily work for someone else. I don't pay attention to percentages, I think as long as what you are doing is effective and gets results, that's what matters.
Avatar for travinski
iVillage Member
Registered: 05-21-2004
Sun, 02-13-2005 - 1:40pm

>>>Some financial experts say that you should pay off all your credit card debt first since it's a better return on your money since savings interest pays very little and credit card are generally high interest.<<<

While this financial expert may be correct,he fails to take into account the mental and emotional toil that one goes through when you have no money and mounds of debt. At least when you have some savings, you can hold your head up high when you go to the teller's. I used to avoid going to the teller as much as possible because I was so ashamed of my bank balance. I have heard experts say pay yourself first, pay some savings and pay debt. This sounds much more reasonable to me. A person's dignity and integrity is involved here - I think that's where your financial expert skidded off the road. I think you are both doing a great job!

Travi

 

iVillage Member
Registered: 09-21-2004
Sun, 02-13-2005 - 2:09pm
I think I have finally convinced dh the importance of saving money. We finally have a savings for the first time in 2 years. It feels so great and I will be adding so much to it in the next couple months. It makes me feel tons better than if I were to put the savings to my debt. I feel more secure.
iVillage Member
Registered: 09-25-2003
Mon, 02-14-2005 - 12:39pm

I agree with paying into savings while paying down debt. For us, it's because this forces us to keep good habits...we have money automatically deducted every month into our RRSPs.

If we paid everything on the debt, we would be out of debt faster, but we would also be more likely to fall back into debt. If getting out of debt is a long and painful process, we are less likely to make choices that will get us into debt again. And we are starting to notice that the amount we are paying onto our debt, if we didn't have this debt, would make a really nice down payment. I don't know if this makes sense to anyone, but it works for us.

In the end, each person has to do what would work best for them. It's also really nice to have a large bank balance, which we hope to eventually have.