I have been really contemplating putting majority of my refund ($2000) into my emergency fund. That would bring my balance a little over $5K.
I would then use about $500 to pay down my credit card debt and then use the remaining $129 for myself.
It is just a thought I am entertaining at the moment.
I know I should probably use all the refund to bring down my debt.
I have two weeks to make a decision.
Question for my readers: Debt first or savings?
Don't limit your answer to my current situation. For anyone dealing with debt, how do you prioritize between becoming debt free and building a sound safety net (i.e. Emergency Fund)? Especially when you have children?
I would then use about $500 to pay down my credit card debt and then use the remaining $129 for myself.
It is just a thought I am entertaining at the moment.
I know I should probably use all the refund to bring down my debt.
I have two weeks to make a decision.
Question for my readers: Debt first or savings?
Don't limit your answer to my current situation. For anyone dealing with debt, how do you prioritize between becoming debt free and building a sound safety net (i.e. Emergency Fund)? Especially when you have children?
Comments
However, I had no CC debt, just a car and student loans - both financed at 5.5% or less. My logic: the savings rate and the loan rates were about the same, so there was no risk to making either a priority.
If I had CC debt, my decision may have been different. When you really think about actual dollars and cents, why would you save a large lump sum (greater than 1 mon expenses) earning ~3% in a savings acct (less than that after taxes) when you have debt growing at 10% or more?
If I were in your shoes, I'd save 1 month expenses, tackle CC debt, save to max e-fund, then tackle other debt. But this is just my $0.02. You gotta do what works for you.
Once your bank account is built up to a level you're psychologically comfortable with, I'd do 50% debt, 10% savings, and 40% investments.
You should never stop saving some percentage in cash. It's an important part of a balanced investment portfolio.
I'm kind of a .. die-hard DEBT FIRST kind of woman.. so I'd throw mine into debt but.. feel kind of a twang about putting $500 into my EF just to feel good about it
Thanks for your suggestions. Single Guy is right......who says it has to be all or nothing. I will split the refund between my savings and cc debt. I just need to figure how much goes where.
Also, you may want to adjust your witholdings at work. I am not a fan of overpaying uncle sam, and that is all a refund is.