The balance between paying down debt and savings

[Tradd]

Would you consider a part-time side job? Maye something just temporary for the holidays?

Physically impossible with my knees. I was diagnosed with severe osteoarthritis in both knees a couple of months ago. I can’t stand for a 90 min church service so I sit in choir (no one else does), so there’s no way I’d be able to do a retail job.

And I have to admit, it wouldn’t be good for my mental health to go from stressful full time job to a retail job. I need downtime.

To be honest, I make good money. I just need to buckle down and be more disciplined about things.

[catherine]

If you go strictly by the Dave Ramsey playbook, you would have only $1000 in savings, stop paying on your retirement and knock off the debt by every means possible, and then go back to saving.

I am having the same conundrum because we are finally making an official transfer of our house to our son who is buying it. I also have debt and so I have been grappling with the same question. I will absolutely kill me to use one penny of the house money to pay off debt because I need that little bit of money for our retirement, but when I look at the interest rates going out to the debt vs the interest rates that would come in with invested money, to me it makes no sense to continue paying off the debt over time when I can just eliminate it. But I tell you, it breaks my heart to have to do it.

[Tradd]

Catherine, I’m 54 and have retirement savings in a IRA that was a rollover 401K from a job years ago. I lost some years saving for retirement due to Covid unemployment, having a job without a 401K, and having to wait to be eligible for current job’s 401K.

I just put $1K on cc yesterday as thr middle of the month paycheck doesn’t have much allocated from it.

[catherine]

Catherine, I’m 54 and have retirement savings in a IRA that was a rollover 401K from a job years ago. I lost some years saving for retirement due to Covid unemployment, having a job without a 401K, and having to wait to be eligible for current job’s 401K.

I just put $1K on cc yesterday as thr middle of the month paycheck doesn’t have much allocated from it.

You mean you put 1k towards a credit card?

[Rogar]

I have a relative who gets The Economist online free from the public library. I'm not exactly sure how that works but suppose it's much like checking out their digital books.

I don't have any brilliant ideas on the rest, but most financial advisers I'm followed recommend maxing out a 401k if the employer offers matching funds, which is basically free money. I might be in the pay off credit cards first crowd just because debt makes my uncomfortable, but it is a balance.

[iris lilies]

If you go strictly by the Dave Ramsey playbook, you would have only $1000 in savings, stop paying on your retirement and knock off the debt by every means possible, and then go back to saving.

I am having the same conundrum because we are finally making an official transfer of our house to our son who is buying it. I also have debt and so I have been grappling with the same question. I will absolutely kill me to use one penny of the house money to pay off debt because I need that little bit of money for our retirement, but when I look at the interest rates going out to the debt vs the interest rates that would come in with invested money, to me it makes no sense to continue paying off the debt over time when I can just eliminate it. But I tell you, it breaks my heart to have to do it.

Aren’t we strange in our attitudes about money? Because I feel strangulated at the idea of debt and would rather have an asset balance sheet of $0 with 0 debt than debt plus some assets. I celebrate the folks on Mr Money mustache who get to $0 asset status with no consumer debt in their financial journey, I consider that the first critical milestone in financial health. The next one is assets of $100,000.

But of course this does not address the interest rate you are paying catherine and if it is low enough, it might well be a good financial move to keep the debt and continue to pay it down. It isn’t always smart to pay off debt, though I guess you did say your interest rate is high enough that you should pay it off.

[happystuff]

My strategy would depend on how much debt there actually is.

I kind of agree with sweetana3 about the building the savings - especially considering your other job posts. The good thing about that is, if you put more towards saving and the job situation becomes more secure, you can then pull the money out of savings to pay off the debt.

[Tradd]

I have a relative who gets The Economist online free from the public library. I'm not exactly sure how that works but suppose it's much like checking out their digital books.

I don't have any brilliant ideas on the rest, but most financial advisers I'm followed recommend maxing out a 401k if the employer offers matching funds, which is basically free money. I might be in the pay off credit cards first crowd just because debt makes my uncomfortable, but it is a balance.

My library stopped offering it earlier this year because the Economist changed some rules about loaning their digital editions. I’m finding that it had invaluable information that affects my work so I’m keeping it.

[Tradd]

You mean you put 1k towards a credit card?

Yes.

I’m going into my off season for diving. There’s occasional WI mine (cave) diving, but maybe once a month at most. I cancelled my MX trip so there’s no winter trip this year. I should be able to hunker down and either throw cash in my savings or at the cc. I’m still mulling over all the responses, thank you.

[iris lilies]

Yes.

I’m going into my off season for diving. There’s occasional WI mine (cave) diving, but maybe once a month at most. I cancelled my MX trip so there’s no winter trip this year. I should be able to hunker down and either throw cash in my savings or at the cc. I’m still mulling over all the responses, thank you.

You are a dozen-ish years away from retirement, although, of course, you don’t have to retire at your Social Security full retirement age. But I think you should be looking towards a program of putting on your charge card only that what you can pay off at the end of the month. By retirement, plan to live on no credit..