Saving vs. Debt Repayment

[myself]

$120 and 2 months early isn't worth the price of putting that $100 into a savings account. If that's all you're saving in interest, then you either have a low rate, or small balance.

As some others posted, make sure that the rate on the credit line doesn't go up to a very high rate, or the difference may be considerably more than $120 and 2 months.

Keep in mind that if I can borrow at a low rate, but I am guaranteed to earn a higher rate, I will most likely do it most of the time. As an example, borrowing $30,000 @ 0.99%, but putting it into a savings account @ 5.05% will most assuredly make me some money (and yes, I've done just that).

[n_vizion]

Saving or paying off debt is dependent on your interest rate. I cary 0% interest on the card I owe, so I chose to save and pay the card at the end of the year with the money saved and interest earned.

[Dave Rowtree]

I'd say have savings to cover emergencies then get rid of the debt as soon as possible; more than likely it costs you more money in interest with the debt that you would gain by having the money in a savings account. At 5.5% you'll be earning in interest a lot lower than $120: even if you put in the $1700 straight away (and you won't, you'll gradually save it) you would only get $85 in interest over a year. The actual figure will be a lot lower.

I'd check your sums as well on the loan figures: $120 saving sounds very little and indicates you have a very low rate loan.

[Aleta]

In the end, most of these decisions hinge on how it makes you feel having a savings account. It's like buying stocks; some people are risk adverse, so being heavy in stocks would keep them awake at night.

Everyone needs some kind of emergency fund even if a small one. I live in a hurricane prone area and by experience keep cash in the house for those times. Some on this board have what they call baby emergency funds and those are usually cash funds at home that are readily available. Sometimes a credit card is not always an option. I use this fund during the month for my cash expenses and then withdraw the money I have used one time at the end or the start of the next month.

[equipmentleasing]

Paying your debts soon could give you peace of mind but you'll never know when emergency arises.. so I'd go for saving

[pennrj430]

My opinion is that you should aim to pay off all your debt one by one by paying the min payment on all but the one you are focusing on, throw all your extra money towards that one, and when that one is done, go to the next one, and so on.. This way, once all that debt is gone, you can save up an emergency fund extreamly fast if you just keep making those payments to your savings account. I know that there are many different ways, but that one worked for me.

But, getting back to the original question, if putting $100 in a savings account makes you feel better about what you are doing, and will keep you focused, and it only sets your goal back by 2 months and $120, then you should do it.

[JasonEngler]

Pay yourself FIRST... ALWAYS!

I know it seems silly when you have a mountain of debt in front of you...but you have to change your behavior and start paying yourself first.

Translation... Keep socking away your $100 into savings at whatever intrest rate (I don't care if it is only .0001%!

[Mike_Joiner]

Saving or pay off borrowing

Paying off the borrowing has to win every time. The interest rate is bound to be higher on the borrowing so you will be saving more. Although having money for a rainy day is sensible it will also tempt you to dip into it for those things that are not essential. Perhaps a halfway house would be to save some but then stop and swtich those payments to paying off the debt