Comments on: In Recession, Save Cash Before Paying Debt: Do You Agree?

By: Sophie Kinsella

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By: Rick

Rick — Fri, 18 Sep 2009 18:26:04 +0000

Save some cash! My wife was just unemployed for 3.5 months. I saw it coming and started paying only the minimum payment on our card and using it for everything. This enabled us to pay our rent, car payment, and utilities with cash and not have to worry about calling the landlord to explain why we couldn’t pay rent. Had I paid the cards in full, I would have been screwed. She just landed an excellent job and I got a raise, so by the new year the debt we accumulated should be paid off. Disaster avoided.

By: Avery

Avery — Fri, 21 Aug 2009 01:06:27 +0000

I am totally agree with you,if we do not have money how can we pay off debt.

By: ken

ken — Thu, 09 Apr 2009 06:34:45 +0000

Suzan orman is confused.There is notting better then been debt free.take the chance, pay your credit card first before you save.

By: Live for Improvement

Live for Improvement — Fri, 13 Mar 2009 19:47:12 +0000

I think the point is that you must prioritize your paycheck. There is no reason to worry about interest rates and credit scores, if you are eating out of a trash can because you lost your job. Make sure you have enough liquid cash on hand to “survive” the current economic emergency. Once the economy is better and we have employment security credit card is the next priority.

-Dan Malone-

By: Adam @ Checkbook Diaries

Adam @ Checkbook Diaries — Thu, 12 Mar 2009 13:31:05 +0000

I continue to attack my debt as a higher priority than building my emergency fund at a faster rate. I would possibly start by saving 1 month of expenses in an EF while paying the minimum on the cards, but then decrease the monthly contributions to the EF once that small buffer is built. Don’t actually stop contributing to your EF all together, but reduce the amount…maybe $50 a month? And absolutely make the saving automatic. Set up a separate direct deposit from your employer (if that is an option) that goes directly into your EF. Paying off your debt faster will save you alot of money in the long run.

By: Jason Simon

Jason Simon — Mon, 09 Mar 2009 17:39:37 +0000

I wrote about this topic at Qvisory http://qvisory.org/posts/emergency-fund-takes-precedence. Maybe, paying the minimum isn’t enough, but how about a little over (the minimum) each month, and then the rest towards the emergency fund…

By: David

David — Sat, 07 Mar 2009 15:17:37 +0000

I’ve been thinking about this a lot lately since I recently took on a high interest car loan and wanted to pay it off quickly. I’ve been making two or three payments a month, but not saving anything except for my 401K.

I believe almost any of us could lose our jobs at anytime right now.
I think it’s dangerous not to have at least a couple of months expenses in cash.

I’m going to limit the car payments to two a month and put the difference
in my savings account until I reach two months. Then I might divert some back to the car loan while continuing to build the emergency fund.

By: Jessc098

Jessc098 — Sat, 07 Mar 2009 05:04:27 +0000

Yikes! This idea of stashing money in savings while sitting on a credit card debt of two or three or five times the interest is frightening to me. I have an IRA that I could withdraw from in the event of an extreme hardship. I’ve thought this issue over a couple of times myself and have decided to keep paying down debt, and take my chances. Some good news from my broker yesterday that they’re forcasting an upturn in markets in September and Economic recovery beginning in December is enough to keep me going ahead. Also, I’m self-employed in a recession-proof business, and DH works for the government. While our income isn’t guaranteed, it’s still relatively stable.

By: John

John — Thu, 05 Mar 2009 18:39:43 +0000

I agree with her standpoint on this, especially during these times. because your emergency fund can be literally a life saver and cannot be taken away from you. Not having CC debt, while nice, doesn’t amount to much if you lose your job and have to eat, pay bills, etc if you cannot use the credit again. And you cannot assume that credit will be there if you need it. The EF will always be there.

And the bottom line is, if things get really bad, that CC debt can go bye bye with bankruptcy. sure, it kills your credit and all that, but when it comes down to it, which would you rather have if you could only have one, a nice credit score or the basic necessities of life?