Welcome to No More Spending; how we manage our budget as we attempt to pay off our mortgage early, move abroad, and reach Financial Freedom by 2020. You can read more about this site here and subscribe to get all the latest updates sent to you by email or RSS feed here.  Thank you for visiting!

14 September 2009

Debt vs Savings: how we do it

Further to my post yesterday I received an email asking why, when we have savings, we don't pay off my debt. There's a couple of reasons for this, which I'll answer here:-

1. We decided early in the year to save a 12 month emergency fund. This was because dh and I worked for the same company and if the worst happened (we both lose our jobs) we wanted to be able to meet our financial commitments. Prior to this in 2008 we were paying down our mortgage at an accelerated rate and had little savings.
2. I view this debt as mine, all mine. Dh has never been in debt (apart from the mortgage) and I wanted to pay it all off myself and learn my lesson in doing so.

What do you think, is this how you would do it?

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4 comments:

  1. I think you've got it spot on.

    I know some would rather attack the mortgage and the debt but I believe in pay yourself first whilst of course still meeting financial committments.

    There is no point in putting large amounts to debt/mortgage without sufficient savings,IMHO this is a huge risk to take and could expose you to all sorts of financial problems if things take a turn.
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  2. I think that makes a lot of sense. I also really respect your decision to take care of your debt yourself. That takes a lot of guts & character.
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  3. I had both debt and savings as well. First, the savings are a safety net as you noted. Without a safety net every little unexpected bump in the road will drive you back into debt. Two, I was proud of my savings and watching the balance grow helped me deal with my other financial demons. I think it depends on the person, some want to put everything towards debt while others would rather keep some money in the bank.
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  4. I was actually wondering the same thing, so I'm glad you clarified. And now that you did, it makes perfect sense. Also: Good for you for paying off your debt yourself! That takes a lot of guts. How has your husband responded to this decision?
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