savings, paying off debt or doing both?

[ILoveMyBabyBird]

I know there are camps that say pay off all debt first, get an EF going, or do both at the same time, I am leaning toward the latter. Here's the skinny:

we were about 49,000K in debt about 1 1/2 years ago, but since have paid over 27,000 of that debt off. (this doesn't include some of dh's medical expenses that will be paid for by a settlement when it comes in). We have recently traded in one vehicle and no longer have any car payments, freeing up 400$/month, plus I cancelled our gym membership freeing up 41$ a month. Dh has a variable income, so at this point we want to save up some money for EF and other expected expenses, (taxes, birth for 2 nd LO, and his parents visit), Plus we have some other car repairs/tires, new dishwasher we need more immediately to save for. So what would you do with the extra 441$? Pay off debt, save it or divide it in between the 2 expenses?

[Denvergirlie]

Do you have any savings at all? It not, I would immediately set some asside in savings, at least $1- 3K to be touched for emergencies only.

How secure is the incoming income? Any possible job loss?

After a small emergency fund savings, I would send the rest to debt and/or sinking funds for tires, 2nd kiddo, etc. Dishwasher would most likely be put off until debt free as it's not necessary.

How soon do you need the tires?
How soon is 2nd LO coming? What would be the estimated cost of this?

How much do you already send to debt pay down before this additional $441?

Some of those above questions might alter my suggestions personally.

[sunnysandiegan]

Short answer: I do both simultaneously. Having cash on hand is critical in my opinion for truly getting out of the debt cycle (and compounding interest needs time to do its magic, so start ASAP). The percentage/amounts to each category changes with the details; it isn't 50/50 for me.

Long answer: Like DenverGirlie, I would need more information before giving specific information on your newly freed-up $441.

[ILoveMyBabyBird]

here is some more info

Originally Posted by Denvergirlie

Do you have any savings at all? It not, I would immediately set some asside in savings, at least $1- 3K to be touched for emergencies only. I just started the ef, so as of now we have less than 100$

How secure is the incoming income? Any possible job loss? the job is secure, but it is 100% sales, so income varies. Dh is one of the best salesmen and does decent most months although there are a few months we struggle.

After a small emergency fund savings, I would send the rest to debt and/or sinking funds for tires, 2nd kiddo, etc. Dishwasher would most likely be put off until debt free as it's not necessary.

How soon do you need the tires? Probably within the next couple months, definitely before winter weather (november)
How soon is 2nd LO coming? What would be the estimated cost of this? April, i will have to pre-pay some of the services, but I am guessing possibly 3000$ or less hopefully.

How much do you already send to debt pay down before this additional $441? We pay just the minimum right now, when we have more we would put it toward the debt, but the minimum is about 500$ a month.

Some of those above questions might alter my suggestions personally.

[Canadianne]

We do both at the same time. I'm not comfortable sacrificing either in order to make higher payments to the other.

For savings we have an emergency fund, a vacation account and a property tax account that we make monthly contributions towards. I consider all of these accounts to be crucial in ensuring that our line of credit is used only for home renovations (which are pretty much done ) .

In January our finances will change and we will have more money freed up. When that happens I will split the amount between savings and debt repayment and increase the payments towards both.