Wnt2beAMom
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Opinions?
Pay off Debt or Save? Or a little bit of both?
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Always pay off debt first, there is no point saving if you've got debt that has interest on it. There's exceptions of course, like a mortgage. But if the debt costs you money then that needs to be priority ideally. If you've got the money to do both I would up the debt repayments, it is obviously hard to speculate though without knowing the kind of debt etc, but generally this would be my opinion!
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Yep debt first. I follow Dave Ramsey's baby steps and step 1 is to save up $1000 (or $500 if low income) as quickly as possible as an emergency fund and then pay minimums on all your debts but the lowest which you pay off as quickly as you can and then move on to the next lowest etc. Some people say to pay off highest interest debts first and that's fine to do to, but by paying off lowest to highest most people find it more motivating to see debts getting paid off quicker that way and freeing up money from getting rid of those minimum payments let's you make more headway.
Step three is to save up 3-6 months worth of expenses as an emergency fund instead of just the $1000.
Step three is to save up 3-6 months worth of expenses as an emergency fund instead of just the $1000.
Save an emergency fund first (I think three months of salary is a decent fund) unless you would easily be able to access money without savings, then pay off debts as you will pay more interest on loans than you earn on savings, unless you have a 0% deal, in which case you could save, take the interest and then use the savings to pay off the debt as soon as it switches to charging interest.
Wnt2beAMom
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Well I'll give you a picture of our circumstances but pretty sure now we are going to pay off debt first and save for emergency at same time.
We have $25,000 in student debt now that we are out of school. It doesn't accumulate interest while you are in school only once you are finished it starts. These are two loans one of which is 5.5% and the other 3%. We were saving a down payment through school to buy a house, and we have $12,000 saved. We could pay all of the 5.5% loan off right now. We just really want a house
and sad that we are so close. Our rent is very decent and we love the location we are in. We really only want to move because we don't like sharing walls with our neighbours. You hear everything and they hear everything lol. We live in a townhouse.
We realized that with our TTC plans and house buying plans we might be over our head with all of it at once. A monthly mortgage payment will be a lot more than our monthly rent now and if you put me on mat leave and a loan to pay off we could be very stressed....So we have budgeted that if we focus on the debt first we will be debt free in 8 months. Then we can start the house savings again and would have enough to buy a house in the summer of 2015.
The house we live in now is 3 bedroom, so we have room for a nursery, but then there is the sound problem..I know our neighbours will be woken up same as us when baby cries lol. But it will only be there for a little while if baby is born in Feb, if we conceive first month, which I doubt. So we could then be in a new house by the time baby comes...we review the budget ever so often so we could afford to buy sooner once debt is paid. Right now this is a tentative plan.
We have $25,000 in student debt now that we are out of school. It doesn't accumulate interest while you are in school only once you are finished it starts. These are two loans one of which is 5.5% and the other 3%. We were saving a down payment through school to buy a house, and we have $12,000 saved. We could pay all of the 5.5% loan off right now. We just really want a house
and sad that we are so close. Our rent is very decent and we love the location we are in. We really only want to move because we don't like sharing walls with our neighbours. You hear everything and they hear everything lol. We live in a townhouse.We realized that with our TTC plans and house buying plans we might be over our head with all of it at once. A monthly mortgage payment will be a lot more than our monthly rent now and if you put me on mat leave and a loan to pay off we could be very stressed....So we have budgeted that if we focus on the debt first we will be debt free in 8 months. Then we can start the house savings again and would have enough to buy a house in the summer of 2015.
The house we live in now is 3 bedroom, so we have room for a nursery, but then there is the sound problem..I know our neighbours will be woken up same as us when baby cries lol. But it will only be there for a little while if baby is born in Feb, if we conceive first month, which I doubt. So we could then be in a new house by the time baby comes...we review the budget ever so often so we could afford to buy sooner once debt is paid. Right now this is a tentative plan.
Kitteh_Kat
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I would pay off as much debt as possible before taking on a house. There are so many expenses that you don't even think about that come with home ownership (I used to handle property claims, so I've seen a lot of what can go wrong with a house... and how expensive it can be). And there are so many things that could change before you have a baby and are ready to settle down into a permanent location. Good luck with getting it all squared away! Sounds like you two have a solid plan. 
