Is anyone trying to build up a savings while paying down debt? 

It's hard to cut up the credit cards with no other emergency fund (as in er, flat tire etc)
What's everyone's strategy for doing so?

A lot of people I know have recommended that you first build up a savings of $1,000 before paying down your debt....

Yes.....I would save up $1000.00-$1500.00 before beginning to pay down that debt if you can.

Ed

Is it better financially though?  Because if I have a thousand dollars free on a credit card than I'm not paying interest on it but the money is still available for an emergency.   
I do think I need to build a savings but I'd hate to give up paying down debt altogether while I'm doing so.

I think some of it is psychological. Paying down your debt , especially your high interest credit cards makes more sense financially. But putting even a small amount, such as $25 a month in just a regular savings account at your bank or credit union some how makes  people feel better. Knowing you have something in the bank that is yours that no one can touch  This can be encouraging and help keep a individuals resolve up especially if they are looking at years and years before their debt will be paid off.

flint wrote:

I think some of it is psychological. Paying down your debt , especially your high interest credit cards makes more sense financially. But putting even a small amount, such as $25 a month in just a regular savings account at your bank or credit union some how makes  people feel better. Knowing you have something in the bank that is yours that no one can touch  This can be encouraging and help keep a individuals resolve up especially if they are looking at years and years before their debt will be paid off.

That makes sense.  I would, mentally prefer to have money set aside that is "mine".  (of course it seems like whenever I do some new bill comes along)

Jenn,

That money on your credit card really isn't free in the sense that, if you don't pay off your balance in time, you'll pay interest in additional to your payment.  Getting into the habit of regular savings, even if it's a small amount each month is the wiser course of action.

Well... I have a very strong opinion for you on this one.  The emergency fund is CRITICAL!    Our debt situation is largely due to not having one.  We have the worst luck ever, I swear, and we find those "emergencies" happening often.  Every time one happens that we aren't prepared for... out comes the credit card.  Using your credit card for your emergency fund is like starting a snowball and letting it roll down a huge hill. 

It's definitely difficult to slow down your debt repayment to slowly save money, but when you have the money in your account to use when you need it... You'll feel the relief.  It's like taking a deep sigh instead of the chest-sinking feeling you get when you have to use that card again. 

Even if it prevents you from catching up on your debt for a while, it will certainly keep you from making it worse.

My strategy is simply having our bank direct deposit money into my savings every paycheck.  It's not much, but its add up and I don't have to think about it.

Last edited by WannaBeDebtFree (2007-07-13 07:29:53)

I am in Total Agreement with WannaBeDebtFree.  You have to save even if it is a little at a time.  What if the Credit Card Company stopped authorizing your credit ability.  Cash making some form of interest is of critical importance to have for back up emergency.   I also want to get my debt out of my way, but need to live and don't want to be in complete despair again.