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Savings vs Debt?
Savings vs Debt?
I have around ?8k in ISA savings. I also however have around ?7k in various overdrafts and debts. common sense tells me I earn less in interest on the savings than I am charged in interest on the debts. however I like having the savings there as rainy day money. Should I just get rid of the debt using the ISA?
Answers:
GoGo Yubari: take ?4k out of your savings and pay off your oldest debts !
2008-01-16 04:57:54
2008-01-16 04:57:54
angel-d-lite: I'd definitely get rid of the debt and then start saving again.
2008-01-16 04:57:57
2008-01-16 04:57:57
gordonmother: Yes, for the reasons that you have already stated.
2008-01-16 04:58:24
2008-01-16 04:58:24
sarahjaynexxx: yeah i properly would because you get loads of interest put on debts so ill pay it off while you have the money x
2008-01-16 04:58:43
2008-01-16 04:58:43
Chosen Answer
karioth: Yes, paying off debt is more important than having a rainy day fund. If you have a lot of debt, and the rainy day is particularly bad, and your savings cannot pay for it, you'll be in a bad position to try to borrow more. However if you are more or less balanced, getting more loans is less difficult. So basically if you are in a situation in which you can borrow more at any time, then yes, pay it all off, and if you need more money just borrow, in the meantime you will be losing less interest. If you cannot readily borrow money, pay of some, and keep maybe 3-4k around just in case.
2008-01-16 04:59:45
karioth: Yes, paying off debt is more important than having a rainy day fund. If you have a lot of debt, and the rainy day is particularly bad, and your savings cannot pay for it, you'll be in a bad position to try to borrow more. However if you are more or less balanced, getting more loans is less difficult. So basically if you are in a situation in which you can borrow more at any time, then yes, pay it all off, and if you need more money just borrow, in the meantime you will be losing less interest. If you cannot readily borrow money, pay of some, and keep maybe 3-4k around just in case.
2008-01-16 04:59:45
Stephen M: well if your interest on your debt is higher than the interest on your savings then yes it would make sense to get rid of the debt because otherwise you are simply throwing money away for no good reason
2008-01-16 05:00:19
2008-01-16 05:00:19
SARAH B: pay off the debts and then put the money you would have used to pay the monthly charges back in your savings. you will be loads better off.
2008-01-16 05:03:53
2008-01-16 05:03:53
nicedoc: Pay off your debts. Think of it this way, by paying off your debts, it's like making an investment with a guaranteed return of the interest on the debt. With the money you'll save by not making any monthly payments, your savings will build back up in no time.
2008-01-16 06:24:11
2008-01-16 06:24:11
SELB: There is no, yes or no answer.
If yes, do you have a strategy for saving money.
If no, do you have a strategy for paying off the debt.
2008-01-18 11:21:26
If yes, do you have a strategy for saving money.
If no, do you have a strategy for paying off the debt.
2008-01-18 11:21:26