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Sometimes I wonder if you can read my mind. Or, maybe I write in such a way that you get a sense of what may be going through my mind. Either way…I’m busted.
Danielle left a comment on yesterday’s post:
Hmmm…What about taking $1599 out of savings and putting it towards your debt? You’d still have $1609 in savings…. C’mon, you know you want to…
Oh yes…I am very tempted to do it and have thought about it. I really want to hit that big 4 figure debt milestone. At the same time, though, I really like that money in our savings account. If something happened, it would cover a month and a half of our expenses. It means that we are not living paycheck to paycheck anymore and I love that.
With paying off our debt, we are paying for our past financial mistakes. With having money in our savings account, we are building for our future. Our savings account is a reminder of how far we have come. As much as I’d like to hit that debt milestone, it will have to wait a little bit longer.
Now…ask me again when we only have $3,000 left to pay towards our credit cards and we have $3,000 in savings. 
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Credit Card Debt
- Starting = $37,614
- Paid Off = $28,750
- Current = $8,864
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Posted: April 9th, 2008 at 5:50 am
The temptation would be very big for me as well! Shoot, I can’t even get myself to start a savings account because I feel like it is detracting from the credit card payments (I know, I know…it’s not a good thing)!
Posted: April 9th, 2008 at 6:06 am
Tricia I struggle constantly with a similar issue. If it were up to me only I’d only put $500. into our emergency fund and concentrate only on paying off debt but, my wife has convinced me that we need at least one month’s worth of living expenses in a BEF.
Posted: April 9th, 2008 at 7:13 am
This is why I put my own savings in an ING account for now…
I’ve never been strong against temptation, but the fact that it’s a small hassle to get money out of the ING account (i.e. it’s not instantly available) allows me to ignore the temptation to use savings to pay off debt.
Posted: April 9th, 2008 at 8:29 am
Stay strong Tricia!
I know the feeling! I do! When our credit card debt was under $1000, and we had $1000 in savings, I SO wanted to pull the money out and pay off the credit card, and I ALMOST did. Then I convinced myself to wait just one more month - and then the engine in our car died and we had a $3600 repair bill.
I was very thankful I hadn’t pulled the money out of savings.
The temptation is high, but you *will* get there. You will.
Posted: April 9th, 2008 at 9:04 am
You’re right.
Don’t listen to me. Not too long ago, I became debt free, but I left only $5 in my savings to do it. Then, my semi-annual insurance bill came, which I totally forgot about. On the Daunting Discover card they went. I was so mad at myself. Luckily, we sold our third car within about a week later (which we had been trying to sell and I kind of gave up on). The money we got from that paid off the Daunting Discover *again*, and we got a month ahead, *and* did a mega shopping trip at Walmart (for needs and some wants). Now, I am focusing on building my savings again, still debt free, but very, very tempted to take my savings and take care of things I need to take care of which can more than wait a month or more.
I may be debt free, but my patience level in this area is void. I am a very bad example.
Posted: April 9th, 2008 at 9:18 am
Don’t do this something could happen right after you do it. I think it’s important for families to have a larger EF with a few grand in it. You’re doing a great job paying debt though and you’ll be below the 10k point before you know it.
Posted: April 9th, 2008 at 9:41 am
Here’s some food for thought…
Consider what you said Tricia:
“Now…ask me again when we only have $3,000 left to pay towards our credit cards and we have $3,000 in savings.”
If you did what you jokingly imply - pay off the remainder of your debt with everything in your savings - you’d be starting with a clean slate, but at square 1.
While this may seem appealing, it might not be so warm and fuzzy from a psychological view point.
The flip side is that you continue a steady, disciplined plan to pay down you debt AND build up your emergency fund - making progress on 2 fronts! You’ll feel pretty good going from debt to surplus too!
Of course, then you get to wrestle with the urge to “treat yourself” to a reward and lop a huge chunk off your savings in the process
Posted: April 9th, 2008 at 10:31 am
Keeping that $ in your EF is a change in mentality. It shows alot of discipline and delays gratification. Not an easy concept when you’ve been used to instant gratification.
I admit there is a rush that comes from paying down debt and savings is not “exciting” but once you are debt free, I just know that the “excitement” of saving will kick in.
Posted: April 9th, 2008 at 10:52 am
Uh oh. Now you’re hooked on having money in the bank. Every potential crisis you can pay cash for and move on instead of scrambling and wondering what to do will deepen your addiction.
Your plastiphile friends will think you’re strange if they find out you have the equivalent of a nice vacation “sitting in the bank doing nothing” (your e-fund).
Posted: April 9th, 2008 at 12:00 pm
Don’t forget readers, Tricia’s credit card debt is at 0% interest (correct me if I am wrong and this has changed Tricia) so it doesn’t make financial sense to move money from savings to debt. Interests rates may be plummeting, but you are also making some money on that savings account while your debt does not increase. So you’ve got money for an emergency AND it’s making money.
Posted: April 9th, 2008 at 12:28 pm
Oh I forgot your credit card debt is at zero percent interest. Then Tricia, ABSOLUTELY let it sit in your savings account making money for you!
You’ll get to $0 in credit card debt soon enough! But right now with all of the moving uncertainty, the most important thing is for you to have the peace of mind that you have money in the bank!
Posted: April 9th, 2008 at 12:54 pm
It seems like either way, you will end up ahead.
Posted: April 9th, 2008 at 1:17 pm
That’s right. It is at 0% right now until…off the top of my head…I think it’s October or September. I’ll have to confirm that later.
Posted: April 9th, 2008 at 3:03 pm
The good news is that it seems some CCs are continuing their 0% balance transfers so you should be fine for quite a while on balance transfers.
Posted: April 9th, 2008 at 6:53 pm
When our debt was at its highest point, we stopped putting money into our IRAs and basically had no savings what so ever for about a year. I hated the debt so much that I couldn’t put money anywhere else. After about a year, I realized that we needed a bit more of a balanced approach, and we started funding the IRAs again, and putting $100/month into an ING account. It slowed down the debt repayment, but it felt great to be going in the right direction on multiple fronts - up in the retirement and EF savings, and down on the debt side. I think you’re doing great - keep it up!
Posted: April 9th, 2008 at 10:32 pm
I’ve been tempted to knock off a little debt with our savings, but I keep it for security. I just sleep better knowing I have a few thousand dollars I could get to quickly in an emergency. I agree with you though, if my savings equaled my debt total I would be tempted to push the button and be debt free - start over from zero!
Posted: April 10th, 2008 at 12:48 pm
I LOVE the way you think! I am the opposite; scared to death to dwindle the savings. Thats how we got in this mess in the first place. I would put things on the card to preserve our cash savings. DUMB. Now that I’ve got my 3 month cushion, I have to change that mentality. It’s a lot different for people on commission only income. I wish this was addressed more by pfbloggers. I haven’t found anyone with a similiar situation.
Posted: April 10th, 2008 at 2:08 pm
Either way you look at it, you’re doing just fantastic. Personally, I have a threshold I won’t let our savings get below, which is why we financed part of the new car we just bought. I think you just have to do what feels right to you
Posted: April 11th, 2008 at 7:01 am
As tempting as it is, you’re doing the right thing don’t touch your savings, or ‘emergency’ fund as I like to refer to it. If you did and there was an emergency guess what– you would be forced to use your credit card. Don’t even make that an option.
All the Best