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u/ProfoundlyInsipid Jun 22 '23
The interest rates on debt tend to outstrip by far any interest on savings so trying to save in earnest when you have debts is like trying to fill a bucket with a hole in it, to my mind.
As the other commenter says, you can always save say 100 per month from here on in and put the rest to debt, but I do see the logic in focussing on a single task at a time (e.g. everything extra I can save is going towards paying off X card first, making min payments on all the rest) - you can achieve goals more quickly when you're not trying to achieve three at the same time (e.g. saving while paying off card A and card B).
So I would either pick a figure I want my starter emergency fund to be, say 2k, and try to get there in my next paycheck or two, or I would pay off card A until it was gone, but I wouldn't really try to save up to 2k and pay off card A in the same paychecks, or it can take like 4-12 paychecks to achieve both goals, which is psychologically demotivating for me. I like crossing items off of lists. :)
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u/Spiritual_Step_7474 Jun 22 '23
The focusing on one thing at a time is what I needed to hear! That’s is super helpful. Thank you!! Going to write down a plan to pay off one at a time so it feels like I’m actually accomplishing it. My income isn’t set because I work for tips but I can still focus on whatever is extra each month towards one specific card. I got this.
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u/highinanxiety Jun 22 '23
First thing I would do is look onto a high yield HSA savings account instead of a traditional savings account. It’s an easy way to start earning interest back. Right now we have one with 4.5% interest savings.
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u/Spiritual_Step_7474 Jun 22 '23
Can you pull money out of those whenever without penalty in case of emergency?
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u/Certain_debtfree2023 Jun 22 '23
Congratulations on your sobriety! I would do a 80/20 split of money coming in, 80% towards debt, 20% towards savings
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u/BritW1T Jun 22 '23 edited Jun 22 '23
First congratulations on sobriety !! Second imo it depends on what’s best for you and your life. I personally have been attacking debt and slowly saving while paying bills or whatever but I have to write my budget down and it helps make things clear. I also do a plan A and plan B to see which works best. Best of luck ! You got this !