We Don’t Have Much Left Over Each Month. Should We Save It? – Cathy

“Dear Steve,

We are $23,000 in debt not including our house. We are able to make all payments but nothing is left over to save. $11,000 of this debt is an old school loan that we pay $114/mo on. $5000 is an auto loan. The rest is old credit debt. We have paid down about $10,000 in the last two years. Our credit rating is good. We are in a 30 year fixed rate mortgage with a decent rate. Our house is upside down but not by much. Our oldest son is in love and may marry in 2014. Our youngest son is going to start college in the fall of 2013. We would like to be able to contribute to each of them but right now we have no savings. We have about $100 a month to either accelerate a payment or save.

Should we accelerate our payments to pay down our debt or put the extra money away in savings?


Dear Cathy,

The prudent and logical answer is to save. There is no possible equal replacement for an emergency fund or saving account when you need it.

Otherwise, any unexpected financial emergency, and they will come, will land back on credit and drag you down further.

I understand the feeling of wanting to help. I know it well.

But I think the best way you can help your kids is by digging yourself out of this hole so they don’t have to come to your financial rescue when they can least afford it.

I hope your eldest son enjoys the backyard wedding and your youngest son explores all the creative financing for school that he can.

Don’t let the guilt of what you can’t do financially erode the gift of what you can do with hugs, encouragement, and emotional support.

Please post your responses and follow-up messages to me on this in the comments section below.

Damon Day - Pro Debt Coach

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