AbsolutePunk.net
   Username
Password
 
Share
04:52 PM on 11/27/12 
#1
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
I am an in a position right now where I have enough savings to wipe out all of my debt, credit cards and the remainder of my student loans. However, doing so wouldn't leave me with a whole lot of savings. My condo is underwater by about $20k. I paid off my car last year so that isn't an issue.

In this economy, do you think it is more important to have lots of savings or no debt?
05:06 PM on 11/27/12 
#2
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male

Yeah it's scary, luckily personal debt is decreasing. Maybe people will start saving again as it gets lower.
05:07 PM on 11/27/12 
#3
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
pick the one with the highest interest rate and pay it off fully.

Well, they are all higher than the rate I am earning on my savings. So while I have cash in the bank, I am losing money on my debt's interest rate. So the question is whether or not the risk of having a low savings balance for a while so I can wipe my debt out is worth it.
05:11 PM on 11/27/12 
#4
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
I personally would wipe out all my debt first. From there, everything I don't spend on living is savings, and not going towards payments on something

That would be the plan. Though, risk there is in an emergency I would have to use debt again because my savings is shot.
05:12 PM on 11/27/12 
#5
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
There is always the school of thought that says that I should just pay more on my debt than I save. I have been doing that, and maybe I should just keep doing that.
05:15 PM on 11/27/12 
#6
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
okay so it's kinda all or nothing? pay that shit off. if something bad happens you'll have your credit card, not the greatest idea but at least you won't be caught with your pants down

Yeah, I guess your right. Ughhh, writing that check is gonna be hard.

A lesson to all of you, do your best to not use a credit card, its a real bitch.
06:34 PM on 11/27/12 
#7
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
Send some money to my pay-pal. Show some charity that you libertarians are always talking about. lol.

Get a job hippy!
06:43 PM on 11/27/12 
#8
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
I'm in a similar situation, kind of - I all of a sudden have a healthy amount of money that I really don't know what I'm supposed to do with. Except I don't have any debt, and I don't know a thing about investing.

I would just hold onto it right now.
09:44 AM on 11/28/12 
#9
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
My father's advice on this issue was that it basically amounted to how many months in the worst possible scenario it would take you to find another job. Add up the monthly expenses you have and the rest of the money after the point you've determined to be how long in the worst-case you would need to live off of your savings. That's better off being used to pay off the high interest rate loans (ie credit cards) as no sane, safe investments are going to give better returns than the rates on those credit cards.

Cut-off points people frequently choose are generally 3 month increments. 3/6/9 months are common (my father recommended 6 as safe amount of time for younger people, like in your 20s when you don't have mortgages or children, said that 3 was something you pretty much only did if you had extremely few expenditures and were very young. Of course this was before the recession hit fully). If you're wondering why I'm referencing my father it's because he's a very talented accountant (ie, tied for second on a 10,000 accountant exam (the CIA), he's a CPA) who takes very cautious stances about money management.

The other option of a cut-off point you can pick involves how long your unemployment benefits would last (or if you would have them at all).

If I pay everything off I will be left with about a month of living expenses. But I am also going to have a lot more money because I am not paying bills on my debt, so I could probably get up to 6 months of savings pretty quickly. There are some things I want to do to my condo next year.
05:24 PM on 11/28/12 
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
Welp, went to my bank after work today and approved the payments. Just hit "submit" to pay everything off. Feels weird.
05:25 PM on 11/28/12 
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
Send some money to my pay-pal. Show some charity that you libertarians are always talking about. lol.

Charity is for people who need it, not you.
05:51 PM on 11/28/12 
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
Keep a 3 month safety cushion. Use the rest to pay off the smallest debt account, then work your way to the biggest. Repeat until all is gone.

Then give the money you would be using on debt to Love As Arson or maybe a charity of some sort.

Well, in all honesty I would take the money I would be using for debt and save for a wedding.

I don't feel like I am in any danger to lose my job, so I at least have enough time to save a 6 month cushion. After that a wedding fund begins.
05:53 PM on 11/28/12 
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
Make sure you have 1k in an account, then pay it all off. I'd recommend doing it as soon as possible, pay off all but 1,000 of it, then pay off the rest over the next couple of months.

1k is waaaaay too low. I agree with a lot of people here that you need to look at your savings from the perspective of your expenses. So instead of a dollar amount you look at 3-6 months of expenses and have that tucked away.
05:54 PM on 11/28/12 
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male

Thanks! I'll probably wake up in the middle of the night panicking though haha.
06:04 PM on 11/28/12 
Offline
User Info.
birdman
DUNGEON MASTER
birdman's Avatar
Atlanta, Ga
Male
3-6 Months is what you have in savings after you pay off your debt. Your best source of income and savings is your own dollar bill, which is currently marked by your debt.

I follow the principals of Dave Ramsey, I'd definitely recommend checking him out.

I have 1 month of savings after I pay off my debt. So it's gonna be a year or so before I can get 3-4 months of savings built back up.

$1k isn't 2 weeks of expenses, way too low to have in savings. Though I agree that 1k is a good emergency fund in case something happens with your car or something.



NEWS, MUSIC & MORE
Search News
Release Dates
Exclusives
Best New Music
Submit News
CONNECT
Forums
Contests
RSS
Mobile Version
Banners, Flyers, Widgets
HIDDEN TREASURES
Free Music
Video News
Sports Forum
AP.net Related News
Recommendations
INFORMATION
FAQ
Contact Us
Copyright Policy
Terms of Service
Privacy Policy
FOLLOW
Twitter | Facebook
PropertyOfZack
PunkNews.org
UnderTheGun
Chorus.fm