Emergency Fund

[Trying2save]

Hi - I'm in my mid 20's and trying to get in the habit of saving. I currently live at home but *need* to move out in the next year or two (hopefully as a new home owner).

I've been visiting this site a lot and have got a lot of great advice. One of the things I decided that I needed was an emergency fund. In the past couple of months I've built it up to $1,500. I feel great about that. Now that I've reached my goal for emergency fund (its more of a cushion now - not where I want it to be). Should I be focusing that money towards debt (about $5,000 in student loans, $1800 in CC debt) or toward my savings account for a home? I'm thinking I'm better off putting it towards CC debt, then once it's paid off, either re-direct the money somewhere else or continue putting it in emergency. Thing is, I'm getting about 1.75% at ING for it, peanuts.

Any suggestions, advice?

Thanks all.

[jasonnoguchi]

that's right. Deal with the CC first as it has far higher interest than your saving account for a home, so, putting the same amount of money into that saving account instead of CC will actually set you back financially.

[disneysteve]

Definitely get rid of the CC before you do anything else. Once that is gone, you can go back to funding your EF. Then once the EF is funded, you can start saving for a house down payment.

[maat55]

Since you are living at home you should take the 1500 and pay down the CC, finish it off, then payoff your SL, then save up EF, then down payment.

Go into your home debtfree with an EF, it will be an blessing.

[creditcardfree]

Great job getting your emergency fund started!

The debt is more important than saving for the home at this point. I agree with maat55 that buying a home without other debt and a nice emergency fund is ideal.

[lovcom]

Like what was already said, pay down the CC debt first, then the other debt, and since you're living at home, do big payments until the debt is gone, and that might mean putting the current EF toward that debt.

What I might add is to change your lifestyle and spending habits going foward, so that you never accumulate that kind of debt again. Make this change life long and this will go toward insuring you a long happy life.

Debt is slavery, and bondage, and long after the cool toys you buy turn to regret, will the mountain of debt be there to haunt you and color your future in a very negative way.

Stay out of bondage! Let someone else "prop up" the economy...it's not your job ;-)