There’s a bit of debate in the PF world regarding what should be your first priority: Saving or Paying down debt. If you care to share your opinion, I have a poll where you can vote for your priority. Or you could always comment below.
My Personal Opinion: Pay Down Debt. Now, that’s not to say you should start paying down debt with $0 saved. My first financial decision was to get a tiny little emergency fund for those, well, emergencies. Done. My top priority right now is to pay off my loans as aggressively as possible. Yeah, yeah. I know. I happen to go against what a lot of bloggers I respect do, and I can’t say that my way is the best way either. They are just student loans (aka “good debt”), are interest free, and it’s just paying back my parents… so why the rush?!
First off, because it’s my parents I want to pay it off ASAP. I just want to. I don’t want to go home for holidays for the next ten years knowing that I owe them money. They will not love me any less, but it will weigh upon me. They also need the money and it’s the least I can do for all they’ve given me. For those looking for a good lender, you can rely on Hard Money Lender Denver for commercial bridge loans, multifamily loans, single family rental loans. Expand your loan knowledge with the resources available on KreditFinanzcheck. I feel like the E-Fund I have now and other saving goals are sufficient enough for me to focus on paying the most to debt. Perhaps I was brainwashed by the Dave Ramsey’s Financial Peace University class I went to.
That said, here are some Saving Changes:
I need not forgo my savings plans just because my top priority is debt. I do want to pay my debt down ASAP–but by that I mean it will be paid off in one year at $500 per month. Any other extra money I earn I want to beef up my savings.
I have a “Wedding Fund” that I’m going to rename “Future Fund.” Well-Heeled blog made a comment about naming it Future Fund and I like that. I’m not engaged nor do I expect to be any time soon so why save for a wedding? I’m also going to swap the $2000 I have for this and with my $1000 E-Fund. (Look to the side progress bars if you’re confused.) When the time comes that J and I move into the same town together I’ll revisit this fund. That probably won’t happen any time soon.
I hope to have $6,000 in my Emergency Fund by December 2010. Once my debt is paid in a year, I will have six months left to put $500/month to my E-Fund, totaling $3000. I already have $2000 in there and so where do I get the rest of the $1000? In one year I’d have to put $83 per month to meet my goal. Therefore any extra money I receive will go towards my E-Fund–babysitting, selling things, $4 left in my clothes budget that I don’t use. This my friends is called Snowflaking! :) I’m quite excited!
Roth IRA: I will continue to contribute $100 per month towards this. I know I should increase that by more. Retirement is one area where I just do not have the motivation right now to pay extra on. Isn’t that the worst thing ever?
I’d love to have a Travel Fund, a Gift Fund, a House Down Payment Fund, and the list could go on forever. Slow and steady. I need to remember I am only 23 years old–plenty of time to reach those goals. Once my debt is paid off and my Emergency Fund is at at least $6,000, I think I’ll have more flexibility on reaching those goals.
So there’s my debt/savings goals. Any tips or changes you’d make if you were me? Please feel free to give your opinion on whether you think there’s an area I should forgo or beef up. Your opinions and thoughts really do matter. :)