To ask if you're in debt but still have savings?

[mozzarellasticks]

Just that really. Wondering if anyone out there has savings but are still in debt (credit cards, finance etc)
Asking as someone I work with recently took out a loan to pay off large credit card debts but they still have money in savings.
Why do you have savings AND debt?
Should debt not be paid off first before saving money? Or use the savings to pay off debt?

Yes. I got a 15k loan with manageable payments (mainly DP s debt - he pays the majority of the loan) rather than use 'savings'

The savings are part of an inheritance and I couldn't bare to 'waste' it on debt.

The savings are part of an inheritance and I couldn't bare to 'waste' it on debt.

But surely you're paying more interest on the debt than you are getting on your savings so you're actually wasting even more money at the moment?

(Unless it's 0% interest)

If you have savings you're going to get 1-2% in interest at most (apart from the odd regular savings account that pays more, but that doesn't work for a lump sum) so unless you can use a 0% credit card with low or no fee, you're almost certainly going to be better off using savings if you have them.

To avoid 'wasting' an inheritance on debt, you could set up a standing order to repay the money, in a similar way to a loan, so you're in effect borrowing the money from yourself and you'll pay it back in a structured way, but it should end up costing you less than it would borrowing from a bank.

"DH and I are high earners but most expenditure every month is on a CC. It's paid off in full. DD took full student loans on the understanding she'd invest the cash as she didn't need the money."

Errr.....?????

I have a car loan. No mortgage. Could have paid from my savings for car but hard to build up that fund again. I know l won't miss a payment on the car so happy to pay that knowing my savings are still there. It would take a lot for me to touch those. Its like my security blanket.

I have savings and I have debt, the debt I have is on a 0% credit card. Buying the item on a credit card also gave me added protection. I will pay the amount off during the 0% interest time frame or if anything happens that means I can't pay the monthly amount, eg. losing my job etc, I will pay the remaining amount with my savings.

We are both self employed so we have savings as a buffer rather than paying off the CC debt all at once. As long as the debt is a) interest free and b) manageable amounts we are both happy with this. If we have a good month we pay a large chunk off any debt. We do aim to be debt free but over Christmas our earnings were down as our clients were all closed so we have had to be a little flexible.

@BIgBagofJelly I agree with everything you're saying! Glad you understand where I'm coming from

I have savings and a mortgage and that's it. Any kind of debt, including credit card debt, makes me anxious. All might be fine while all is well but if someone loses their job, debts can suddenly become a huge problem.

Subscribebelow: How did your daughter get a full student loan if you areboth high earners???

PlaymobilPirate said the debt is not hers, the inheritance is. So the way she is managing the debt is correct for her.

Do people not count their mortgage or student loan as debt? That is the only debt I have but I stil have £5k odd in savings that I put £500 into each month. I wouldn't use up all my savings to pay off £5k of my mortgage. I feel more comfortable knowing I have that savings safety net should I need it.

I don’t county mortgage as debt- I have to live somewhere

Count*

I keep a couple of hundred quid on a credit card, because the bastard bank want to reduce the credit limit to next to nothing every time i clear it.

Every now and then, I'll buy something big on it then pay it back over 3-4 months.

When they cut the interest on our savings a/c to below the interest rate on our mortgage, we paid off the mortgage. Up until then, there was no point.

I have a bank loan for my car which I have enough savings to cover now hut am on maternity leave so will use my savings to pay myself a wage.

There is no point having tonnes of savings and also carrying lots of debt - priorities paying off the debt. But you should have an emergency fund of ready cash so you don’t have to accrue more debt to deal with eg a car repair, a new washing machine etc.

Where budgets often fall down is when they are so tight that there is no contingency. If you have a credit card you’re paying off, you may be able to use the available balance for an emergency, but if you’re committed to the hilt with fixed loan repayments you’re screwed if you have an emergency and have no cash available.