To have savings when i have debt?

[SummerSix]

Just that really...

I don't have much savings as i only started saving a couple of months ago after paying a couple 'bigger' debts off and already had to dip into it but I wish to continue saving a little each month.

Atm I have around 400 in savings so not much at all but its a little buffer should I need it.

I have one debt really except my car with only a few months left to pay on it, as I consolidated everything else onto my credit card with low APR (which is less than half of the interest rate if i hadn't have consolidated).

So I have around 2.5k in debt.

AIBU to keep savings or should I transfer savings into paying off credit card and if needed use the credit card as in an emergency as my buffer?

The interest on your savings will be a lot less than the interest on your debts.

Keep the savings. Having loads of savings and loads of debt is silly, but you have a little buffer, which you might need one day.

If the interest rate on your debts is higher than the interest rate on your savings, you're financially better off paying your debts. But I understand that you want a buffer which your savings provide.

I have around £3k worth of debt (inc car finance) but I also have over £1k of savings plus a substantial amount invested into shares. I think it’s absolutely fine to save so long as you’re chipping away at your debts and not adding to them.

It's not the best use of your money, debts should be prioritised.

Surely a buffer isn't true savings, as in excess money sat doing nothing. I'd say a sensible buffer is what will stop you taking on more debt if something like the washing machine breaks

It is a good idea to have a few hundred pounds in savings and is wise to have that as a backup when the alternative to an emergency would be more debt. However once it is around £500/750 it would then be wise to concentrate on the debt. That amount would cover most eventualities.

As others have said, it's more sensible to pay down the debt, but it is also sensible to have a savings buffer. Could you split what you are able to save and half go to paying the debt every month? I do this because I have savings but also an overdraft, so I split spare money between them.

Having savings could stop you getting further into debt. Dave Ramsey suggests having a small emergency fund for this reason.

And well done on working so hard to clear your debts. You are almost there.

Depends if you are likely to need rainy day money - What if your car breaks down and you need to lay out for fares? What if you need to replace your boiler? What if... once you have covered all the what if bases, then pay off the CC early.

Leave yourself some low amount emergency money.

Everything else should go to pay off debts as presumably this is costing you more than the interest in savings....have a look on mse

And I think when they say that paying off the debt should be prioritized over savings, it is more about sitting there with 3k of savings and 2.5k of debt, not about having an emergency buffer fund of a few hundred.

I think it makes sense to have a buffer.
You need to move your dept to a zero interest card though OP.

Look at the Dave Ramsey debt snowball method. There is a website. He advises saving up a certain amount then start paying off debts. Pay off the smallest debt first even if others have higher interest. Then use the money you'd have used paying that one off to add to the money that you pay the next debt off. It worked for me although I didn't save up the amount he advised.

As soon as the car loan was paid off in a few months time I would put the same amount I was paying out towards my debt and then when the debt was paid that same amount would start going into my savings.

Surely your CC is your "what if" buffer - if the car breaks down, if the boiler needs replacing. The only thing CC can't give you is cash (usually high interest on cash withdrawal). If the debt was a loan that you can't access, then yes keep a buffer - but a CC gives you that contingency.

If you can put your savings (or most of it) into the CC the debt will not attract as much interest, and interest on that interest, so will pay down quicker.

If you leave it in savings, it's easier to take out money for dinner/coffee/lunch or just for cash in your wallet. If you know what you can afford, and don't use your CC for purchases you can't afford then the debt won't grow, and the lower interest rates will help you pay it off.

How much interest are you earning on your savings and how much interest are you paying on your credit card?

There's not much point having a buffer in savings earning nothing when you have debt since you may as well pay off the debt so at least it's not losing you so much money in interest then if you need the buffer in the future you can always increase your credit card debt then if you need to.

Pay off the debt first.

The main issue is if I dont get work. Im a carer on bank work so sometimes loads of work is offered and sometimes I get nothing. Which is why I have a second job now - Just incase.

The buffer is in a savings account.

Keep the buffer.
Everybody has debts and savings. You don't live hand to mouth because you have a mortgage or student loan.

I love it when people say pay off the debt first. Obviously if you have spare money it's right to prioritise it that way but having some savings is important if it can be managed, not least for your own mental health.

Utterly hate using credit card but a few shit happenings last 2 years I had to use it. So im chipping away at it.

Once my car is paid off ill be putting the same amount into my debt. I should be able to pay it off by the end of next year if I get continuous work.

Martin Lewis the money expert was asked this exact question on tv recently. His answer immediately was pay off debt. Because of the interest rates you are worse off by having savings and debt. Always pay your debt off first and then save

Oh and im not planning on saving 5k and pushing nothing into my debt. Thinking about keeping 1k savings and anything over that goes into paying off debt?

Good idea or no?.