Covid saving vs debt

[maxiesmom]

With all of the talk about another possible outbreak of Covid, I'm wondering if anyone has changed how they are handing their money. Is anyone saving more in case of a future outbreak? Or are you paying down any debt you may have?

I'm trying to decide between the two. I have a bit that goes into saving each paycheck, but I can't decide if I should sock away everything I can, or if I should work on paying down debt.

 

[siren0119]

We opted to pay down debt for the most part (we don't carry credit cards but do have a car loan and student loans. Some of that is because my husband will be able to work even if there's another shutdown (he is considered an essential worker) so our income won't necessarily be affected in the same way others' would. But we decided we'd rather reduce our debt so that we save the interest money in the long term. My car will be paid off in a few months and we will save almost $2k on that loan alone.

 

[DisneyHardin]

I'm a teacher and my husband is a police officer, so our jobs are pretty secure even when things are shut down. I have been more conscious about money lately. We just refinanced out house and went from a 30 year to a 15 year mortgage and just that will have us huge amounts of interest over the years.

 

[afan]

I think it depends on what your savings already looks like. If you have enough to make it through the next time then I'd continue to focus on the debt. If you need to build your savings and that'll help you from getting further in debt then I'd focus on saving. Maybe still toss a few extra bucks towards debt each month as even that will help in the long run.

 

[jennyq87]

Cash is king in times of uncertainty.

Having said that -- take any financial advice posted on message board with a grain of salt.

 

[CrimsonRave]

We completely re-did our finances to drop toll bill, gas, daycare, etc. All that extra money was thrown at debt. In the 4 months that we have been locked down we have paid around $29,000.

Both cars paid off 7 months early, all medical debt paid, and 1 credit card gone.

I know this is a bad situation, but our family really needed this time together, and to get our debt under control.

 

[Woth2982]

I have done a hybrid of the two. I saved out Stimulus payment since I am pregnant and it will cover almost what I wont be paid on maternity leave, as well as focus on eliminating some smaller bills and 1 of my 2 remaining student loans.

 

[KPeterso]

I am lucky that I will continue to work and have my income coming in if things shut down again. Right now, I have been saving, but I do have one loan that I am going to throw some money at to pay off. My other bills have been way down, so I have some extra to toss at that loan to pay off sooner rather than later.

 

[Mackenzie Click-Mickelson]

We're watchful of what we spend though we do have different spending than prior to this as a result of being home frequently, couldn't eat inside a place for a while, etc but we have chosen to continue to make payments on our Federal student loans despite no accumulation of interest with 0% interest and no payments technically due until September something. We kept ourselves opted into the program as a cushion in case something happens and we can't make a payment during the time period and we just make a payment each month.

 

[jen7233]

I am saving more cash, yes. When I say cash, I mean in non-investment accounts, that being high-yield savings accounts and leaving more in our checking. Is it in response to Covid-19, on one hand I want to say no. We have some short term goals that make having a cash base more logical. On the other hand, I do actually see myself keeping more on hand in checking as a knee jerk reaction possibly, perhaps as a security because I recognize that financial matters are also representations of psychological factors going on.

For debt, the only debt we have right now is my car, that's it. I could pay it off, but I don't want to right now and just letting the monthly payments autodraft as scheduled, and will for at least the year and reassess it then. Yes, probably a shift in my thinking because if this was my only debt a few years ago, most likely at that time would have snowballed the loan. It's interesting that I'm holding off paying down the loan, as that's a topic my DH and I always disagreed on respectfully, he never wanted to pay loans off early and I always thought otherwise.

 

[Lumpy1106]

Not doing it on purpose - the only debt we have is the house, but I did run a quick calculation on our spending. Turns out we are saving around $1500/ month just by not spending like we used to. Going out to eat was the big one - we were always too busy to plan meals at home on any regular basis. Now we order take-out as a treat once a week, and sometimes even that is a tough sell.

 

[wishuponastar1984]

No debt other than house mortgage. Prior to COVID I had been paying extra towards paying down the mortgage. For my two payments after the lock down I went back down to my regular payment to have a few extra dollars, just in case. I am thankful that I can work from home and there has been no indication that they will be laying people off at my company. Since we have been staying home and not doing many of our typical outings (movies, dinners out, golfing, etc.) the monthly expenditures are down. No commuting costs, only doing takeout when not cooking which saves since we aren't spending as much on restaurant alcohol so our regular savings is up just naturally. I haven't even been shopping much for clothing either since we have all been living in workout clothes and pajamas.

 

[seashoreCM]

For some car loans and furniture loans it is not advantageous to pay off early.
You have to save on interest in order to make it worthwhile.
If the payoff is simply the sum of the remaining payments as shown on the coupons or original payment schedule then that loan had no advantage to paying off early.
The formulas for computing interest vary from one lender to another and from one specific loan to another.
Usually the best loans to pay off quickly are higher rate credit card balances. In addition, for these, the sooner you pay and the more you pay each time the smaller the total interest or finance charges.

 

[tvguy]

I've been working from home since March 20, so that is 1,500 miles worth of gas I haven't had to buy to commute.

My wife still has to go into work four days a week for two weeks, and have one day off with pay one day a week. Every third week she works three days a week, with two paid days off that week, then the rotation starts over. Her company isn't set up for her to work from home, but the goal is to keep the number of people in the building at any one time at the lowest level possible. So saving some gas money there too.

While groceries has gone up, our overall spending is way down. Our only debt is a car loan. Five year loan on a car we bought almost two years ago. Our goal from the start was to pay it off by two years, and despite my wife doing $1,500 damage to the car by hitting the mailbox, it should be paid off next week.

One thing we did decide.....we were going to retire in July at age 63 for me and 62 1/2 for my wife. We have put that off until next year. We could still do it, but we of course don't qualify for Medicare until age 65. We can get 18 months COBRA coverage through my wife's employer. We were going to have to go into the open market to buy about 10 months coverage at a cost of $30,000. We decided retiring 10 months early wasn't worth spending $30,000 for.

 

[TwoMisfits]

Thanks to life, I've been stimulating the economy in all-cash long-term asset buys.

1st, I replaced my 2014 car with a new 2020 car for a great deal.

Then, my HVAC broke, and I stimulated the economy further getting an all new full HVAC system (it was 29 and 40 years old, respectively). B/c I let the small business in with no "sanitation" extra costs (my only requirement was no one could be sick the day before), I got a fabulous deal for my area. 5 years ago, I was given a bid...and doing it this week, I paid $2500 less for the same service. So, way for my HVAC holding out til I got a fabulous deal (and for my area to still not be quite open enough that my HVAC guy had the time for this work - his business is just getting back up to speed (b/c he does a ton of corporate work), and he fielded a ton of calls Monday...but I broke on Saturday, so he and his people did the work Monday before he knew how busy he was gonna get at the end of this week, when we moved up a phase...

But for both, I didn't want debt. When job security is uncertain, I want nothing hanging over my head...it helps in case you have to move, live on limited income, etc...

 

[lovemygoofy]

I think this is delicate balance. Is there anything in savings or enough to last few months? How much is the debt and what kind?
I was reading how people with higher amounts credit card debt is getting screwed. The banking is lowering their ceiling debt limit which is causing the person credit to debt ratio look worse and that in turn lowers the credit score which we all know is needed. Also, some people may need the credit card as back up to live if emergency. If there is not much cash cushion, I'd work on that first because that dependency on credit card living can get out of hand quickly.

 

[mamapenguin]

With all of the talk about another possible outbreak of Covid, I'm wondering if anyone has changed how they are handing their money. Is anyone saving more in case of a future outbreak? Or are you paying down any debt you may have?

I'm trying to decide between the two. I have a bit that goes into saving each paycheck, but I can't decide if I should sock away everything I can, or if I should work on paying down debt.

Both and as aggressively as I possibly can.

 

[arlinar]

We are doing a mix of the two. Paying off any debt and saving as much as we can. My fiancee is still working thankfully and he went from a 50% paycut back to 80%, we are going to work towards saving more. I saved up a settlement I received and my stimulus and CARES act funds for maternity leave.

I had plans to return to work but my job won't let me work remotely saying its for seasoned employees only. With me being high risk and my county having cases go up by at least a 1,000 a day, I'm going to look for a remote part time job. We do have enough saved where it won't kill us if I don't work

 

[kuhltiffany]

First all high interest paid off (Credit Cards) as soon as possible, it does not make sense to be paying 20-30% interest. Lower rate loans under 5% I leave and just pay as usual, then put money into savings.

 

[dosekies]

A mix of both. I’m mostly saving and my SO was too, but we’ve now decided to pay off part of his debt. We were originally planning on buying a house right about now but since that has been delayed for a few more months we’re going to get his credit card payed off. It was a tough decision but will be worth it in the long run!