Setting aside money for savings while paying down debts - Mothering Forums

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#1 of 5 Old 10-20-2011, 03:48 AM - Thread Starter
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Hi there,

General question here. It seems like everything I'm reading about getting our finances in order (which we certainly need to do) includes budgeted money for savings each month, while aggressively paying down your debt and making sacrifices in as many areas you can.

Am I the only one who starts out in this process questioning the money put into savings when you have considerable debt? Can someone give me their general idea of why this is so important (beyond an emergency fund)? Are we saving enough money for particular things (like a vacation or essential home repairs) or is it more general than that? If it might take you 3 yrs to get out of consumer debt (except house and car maybe), what kinds of things are you using your savings for?

Part of the problem of where we are right now I'm sure is caused by us never having had any savings - even when things were going well - so I want to get my head around this part as we start on this next phase to make sure we're moving ahead in the best way possible. Thanks in advance!


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Karen (39), DH (40), DS (7/7/07), with three m/c (11/05, 10/09, 11/10), BFP for mid-November -- keeping fingers crossed!!
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#2 of 5 Old 10-20-2011, 06:49 AM
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Great question!


I see savings as 3 separate areas: emergency fund, retirement, and general savings (for something specific, perhaps). You might also use savings as a cushion for annual or periodic expenses, like property taxes, car insurance, etc.


I can see wanting to put every spare dime toward paying down debt, but I think some savings is a good idea - especially emergency fund and retirement.

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#3 of 5 Old 10-20-2011, 07:19 AM
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I felt / feel better with a bit of savings set a side (for retirement and emergency). It gave me a sense of safety. And it gave some  cash to pay for an emergency (extra vet bill or unexpected car maintenance) instead of putting more $$ on the credit card.


I also knew I could clear up a certain amount of debt by using the savings if I had to.  Once I had a certain amount saved, I then put that monthly savings $ towards the debt.

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#4 of 5 Old 10-23-2011, 04:44 PM
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We recently made the decision to take out car loans.  It was a reasoned decision, based on the needs/wants of our family, our current income, and the current interest rates. 


So yes, we're paying on car loans at the same time as we're continuing to save.  Just to make it easy, DH has always put 10% of his income into his 401(k), and will continue to do so unless something drastic happens.  I also use the income from my part-time job to contribute to a ROTH IRA (much more than 10% of my income, mostly because my income is so low, LOL).  We also have an emergency fund (smaller than I'd like), as well as a targeted savings fund.  Our targeted savings fund is mostly a travel fund.  My brother is an air force pilot and will soon be moving to Germany for 3-5 years.  I want to be able to take my whole family to visit him at least once while he's there.  I actually started the travel fund a year ago when it seemed likely that my sister would be moving to Portugal (she moved to Washington DC instead, LOL).


Honestly, we could've emptied our savings to decrease the amount of our car loans (and we also could've chosen to buy cheaper cars or keep the somewhat-functional vehicles we were driving last year).  But I just don't feel comfortable having nothing in savings.  We have credit cards and plenty of credit, but it still freaks me out a little to think about having no savings.  Both DH and I have stable jobs, but you never know.  Even though my DH (the bread winner) has a very stable job, many of his coworkers have recently left his company for better paying jobs.  In the back of my mind I keep thinking that if DH does decide to jump ship for a better job, we should have money in savings to cover any difference in payment schedules or in case we need to pay for COBRA for a couple of months. 


I guess all of this is my long-winded way of saying that I think it's prudent to save while paying off debt.

New signature, same old me: Ann- mama of 2 boys and 2 girls, partnered to a fabulous man.
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#5 of 5 Old 10-23-2011, 06:46 PM
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There is also something psychological about having savings.  It gets exciting to see the number grow and you want to continue that positive feeling by putting more in.  It's more of a psychological boost, IMHO, than just paying down debt. 

"Our task is not to see the future, but to enable it."
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