Debt free by 2010 with a savings account

[Kayla]

My savings goal is to become debt free for 2010 and kick start my savings account.

I am going to invest 10% of every pay cheque I recieve this year into my savings account while putting 20% of it onto my debt.

I know I should pay the debt first, but I really need to kick start my savings straight away so figured why not?

[gareth]

It makes sense to clear all of your debt first but it can be so demoralising as if you do that and completely neglect your savings it feels like you get absolutely nowhere. It's always a thrill to reach a savings milestone - when you get past that next $1,000 for example.

But you have to weigh that up against the fact that debt grows quicker than savings do if left to themselves!

[alexwilson101]

Yeah it's hard in terms of juggling paying debt VS paying your savings account.

On one hand I want to get a big piggy bank full of money for a future asset purchase, but on the other hand I know that I have a debt that is eating away at my cash at a higher interest rate.

This said, it can be beneficial to have some sort of very small split. So for instance, pay 80% of your money to debt but save the other small amount of 20% towards your goals.

That way debt is paid faster while your savings is making a bit of progress!

[Cash Cow]

Originally Posted by Kayla

My savings goal is to become debt free for 2010 and kick start my savings account.

I am going to invest 10% of every pay cheque I recieve this year into my savings account while putting 20% of it onto my debt.

I know I should pay the debt first, but I really need to kick start my savings straight away so figured why not?

If your heads in the right place, which it sounds like it is, at least you wont splurge on impulse and put yourself back to square one.

I look forward to hearing about your milestone victories in the future Kayla.

[anna76]

I love the idea of having a savings goal and still being able to pay your debt. You dont want to feel like you are just paying your debt off all the time so the savings part is a great motivator I believe. I do the a similar thing myself and I feel happier at knowing I am not putting all my money into one thing only.
Congrulations-you should be proud of yourself.