TheCatSite.com › Forums › General Forums › The Cat Lounge › Advice please: Pay off debt or save for house?
New Posts  All Forums:Forum Nav:

Advice please: Pay off debt or save for house?

post #1 of 14
Thread Starter 
Josh and I are disagreeing about the best thing to do financially right now. We have about $6000 in credit line debt. We also have about $6000 from our wedding gift money.

Option 1 would be to put all our wedding money onto the debt which will basically pay it off, and then start saving for a house while debt free.

Option 2 would be to put $2500 onto the debt, and then start a house saving account with the remaining $3500. Then pay into both things for the next year.

Which is better?
post #2 of 14
I would put the money into your debt. While the debt remains you are paying interest on it and it will cost you more to pay it off int he long run and that is money that could go inot the house fund.

I am assuming though that you have enough other savings that you already have an emergency fund that is good enough for your needs. Various people say that you need to have enough savings stashed away to cover 3-6months of expenses, all your fixed bills and food and gas for that amount of time.

So, I would do things in this order:

1. Emergency fund
2. pay down/off debt
3. House fund
post #3 of 14
Debt free is the way to be if you can IMO.
post #4 of 14
Definitely I would say pay off debt...
post #5 of 14
Quote:
Originally Posted by Lyrajean View Post
I would put the money into your debt. While the debt remains you are paying interest on it and it will cost you more to pay it off int he long run and that is money that could go inot the house fund.


It makes more sense to use it to pay off the debt that you are earning interest on, and then start saving for the house fund with no debt/no interest taking your money.

just IMO.
post #6 of 14
Take my advice with a grain of salt, because 1) I do not have a finance background, and 2) I tend to be cautious - maybe even too cautious sometimes - when it comes to these issues.

Anyway, in my opinion, if your current debt is high-interest (if it's credit card debt, for example), you should follow the advice of the previous posters. In the US, paying down a debt like that could improve your credit rating and help you get a better mortgage rate (I think your situation is different in Canada, though).

As you know, buying a home is a major financial commitment, and it is not always a better deal than renting (that statement may be controversial, but I can assure you that that is the case in my area). I don't know your ages, but my impression is that you're relatively young. Why not use this time to enjoy your freedom, pay down the current debt, and save a little more money?

Whatever you decide, good luck to the both of you!
post #7 of 14
Quote:
Originally Posted by Lyrajean View Post
1. Emergency fund
2. pay down/off debt
3. House fund
That's what Suze Orman says to do......seems like good advice. I HATE paying interest on debt, so I pay it off as soon as I can (except the mortgage....interest is tax-deductible anyway). But having an emergency fund is also very important. Without that solvency, a small emergency can turn into a big emergency very quickly. Home ownership can be a huge money pit. Around here, owning is cheaper than renting, but I understand that's not true everywhere. And, trust me, as soon as you buy the house, you'll have to put a new roof on, or need flood control in the basement, or a new water heater.........
post #8 of 14
Follow Suze Orman and Gail Vas Oxlade's advice. Pay off the debt and then start saving for a house. But also make sure you don't get yourself back into debt. Put those credit cards away for absolute emergency purposes only. If you can't afford to buy something cash, either work more and make more money to buy it, or do without it.

It's stupid to pay interest on a debt when you have money to pay off the loan.

http://www.gailvazoxlade.com/

Check out Gail's website. It will help you get your finances in order and come up with a workable budget.
post #9 of 14
Suze Orman has some really good advice!

If I were you I'd take a chunk of that and put it towards an emergency fund, next I'd pay off as much debt as you can, THEN save for a house!
post #10 of 14
Thread Starter 
So, we ended up compromising.

The credit line is very low interest, so in a year we will pay less than $100 in interest. (We have no credit card debt and are very budget savvy already.)

We are going to split the money evenly into both the credit line and the home account. Josh feels like we should have a couple thousand in the house account to start with so we feel like we are accomplishing something. Also, we figured with the balance of the credit line, it will take less than a year to pay off. Also, he has this idea that people should be able to multitask financial goals. (He is very smart and business oriented, so I trust him)

I am happy with the decision
post #11 of 14
I hate debt of any form so i would have paid it off, because when you get a mortgage anyway that in itself is going to be a debt until it's paid off.

We wrote down all our outgoings on paper when we just got married, but even putting down on paper doesnt always work because something always crops up unexpected, and my late husband was finance.

But, it's what works for both of you
post #12 of 14
Quote:
Originally Posted by Trouts mom View Post
So, we ended up compromising.

The credit line is very low interest, so in a year we will pay less than $100 in interest. (We have no credit card debt and are very budget savvy already.)

We are going to split the money evenly into both the credit line and the home account. Josh feels like we should have a couple thousand in the house account to start with so we feel like we are accomplishing something. Also, we figured with the balance of the credit line, it will take less than a year to pay off. Also, he has this idea that people should be able to multitask financial goals. (He is very smart and business oriented, so I trust him)

I am happy with the decision
I just celebrated my 30th anniversary. compromise usually make things work
post #13 of 14
Debt free - then work on the house.
post #14 of 14
Pay yourselves first , then er fund ,then pay down debt then house
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: The Cat Lounge
TheCatSite.com › Forums › General Forums › The Cat Lounge › Advice please: Pay off debt or save for house?