Becoming Debt Free in 2009

December 10, 2008

Save More or Pay More

Filed under: Budget — ambercouric @ 9:51 am
Tags: ,

My plans were to focus on getting  the car paid off but I’m wondering if I should be more worried about the credit card since the interest rate may change with all the stuff going on with the banks.  The rate for the credit card is supposed to be fixed until the total is paid off  but I’m always afraid that the interest will shoot up.

I need to sit down and really think about what I need to do for the new year’s goals.  It seems to be changing on a daily basis.  I know we plan to up the amount that we put in savings each month by $200 but that is mostly to cover summer camps, tuition for a class for my husband, and a fence for the back yard.

We do have an EF and we aren’t worried about a layoff.  My husband has to take  5 days unpaid leave due to budget cuts but that isn’t a big deal.  My biggest problem is the uncertainty of the economy and how it may effect us.   Maybe I should just quit listening to the news.  It is driving me crazy.

What are some of the unknown effects this economy could have?  What are you doing?  Putting more in savings or paying off more debt.

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10 Comments »

  1. I actually thought about this last night. Should I be working on our EF or just the debt? So far I have been doing both at the same time. And since I can’t decide, I am going to continue to do both.

    Comment by cheryl — December 10, 2008 @ 9:55 am

  2. I am in the same boat. I had a nightmare Monday night about me getting laid off. Then I was talking to my mother-in-law and she saw on the news where my husband’s company may be laying off after the 1st… but his site is at bare coverage and he is the only dedicated one that knows the systems at another site… what to do…

    Comment by Kristie — December 10, 2008 @ 10:19 am

  3. Hi there-it is a tough call as to which one is priority. I personally would prefer to get the credit card out the way, as once paid it is one less bill plus the card can be cut up and not used anymore. This money can then be diverted to another category.

    Comment by sharon rose — December 10, 2008 @ 12:42 pm

  4. I have to pay off debts and save money. I have focused on a balance of savings, retirement, and paying off debt. I put about 17% in retirement, 16% to paying off debt, and 10% in savings. This way I don’t feel like I’m falling back in any one category. I like my balance so far.

    Comment by Movingonup! — December 10, 2008 @ 12:55 pm

  5. It’s funny you should mention CC’s and the economy. I have already rec’d 3 notices for 3 different CC’s I have saying the interest rates are changing (for the worse). Luckily, I have PIF’s these particular cards. So, I don’t have to worry about that one. Then my other card continuously sends me checks for balance transfers at 0%APR and a 3% transfer fee. This crazy economy!

    I also am thinking of paying down the car before the CC’s, too. So, I am at the same dilemma. I say pay down the CC’s first.

    Good luck with your decision. And happy holidays, too!

    Comment by money funk — December 10, 2008 @ 1:27 pm

  6. This is tough! We are at the same crossroad – savings vs. paying down the mortgage (we get no tax relief for Mortgage payments in Canada).

    If you feel your income is secure, go for the credit card. If something does happen to your income, you will have the money for camp, tuition and the fence available for a little while, plus you say you have an emergency fund. Paying down the credit card will decrease the interest you pay in total and give you the flexibility of smaller minimum payments if your income is effected by the economy.

    Comment by Money Minder — December 10, 2008 @ 1:58 pm

  7. I can understand your dilemma, I’m in the same boat. All the best with your decision and I wish I can offer a solution. It would seem like I’m paying attentino more to debt than our EF. I would love to put more in the EF but there is one huge bill that we have to pay off soon with regards to DS and that is what is taking all our funds. I’m still going to try and eek out something to reach my EF goal. Good luck!!

    Comment by Budget Mama — December 10, 2008 @ 2:03 pm

  8. Personally we are trying to save as much as possible. I have the benefit of having a mortgage offset account, so anything in my savings is actually reducing the interest we pay on our debt. It’s also the most flexible situation for us to be in. We had a few nasty margin calls earlier this year, and since then I don’t think we can have too much cash on hand. Thankfully I’m in a secure job and don’t need to worry about that scary possibility of losing my job. That WOULD be a nightmare.

    Comment by livingmyrichlife — December 10, 2008 @ 9:03 pm

  9. Personally we are trying to save as much as possible. I have the benefit of having a mortgage offset account, so anything in my savings is actually reducing the interest we pay on our debt. It’s also the most flexible situation for us to be in. We had a few nasty margin calls earlier this year, and since then I don’t think we can have too much cash on hand. Thankfully I’m in a secure job and don’t need to worry about that scary possibility of losing my job. That WOULD be a nightmare.

    Comment by livingmyrichlife — December 10, 2008 @ 9:04 pm

  10. My efund got wiped out a couple months back and I’ve been restocking it. I put a good chunk in this month just to get it back to $1k because of all the uncertainty. I also spend my money a month behind (ie right now I’m spending the money I made in November), so I’ve also got an additional one month’s income. My expenses are very low, so those two combined are nearly my bare minimum requirement for 3 months expenses.

    I do have a set amount I will contribute every month until it reaches my goal of a full 12 months normal living expenses (paranoia is healthy, right?). What I haven’t decided is if I want to continue throwing my ‘extra’ money at it for the next month or two or go back to paying off my higher interest student loan. Right now I’m leaning towards upping my monthly contributions and throwing the rest at the student loan.

    Oh, and in your place, I would pay the credit card. With the banks cutting limits and upping interest rates, I wouldn’t gamble on things not changing.

    Comment by Slinky — December 12, 2008 @ 8:47 pm


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