Covid saving vs debt

[_19disnA]

Everyone's financial situation is probably different so what others say they plan to do may not be relevant to your situation. Instead, I would think about: 1) do you and your spouse (where applicable) work in relatively 'stable' jobs?, 2) are you near retirement or planning to retire soon?, 3) what debt do you currently have vs. your assets?, 4) any children about to start college?, 5) any major home repairs needed?, 6) planning any large medical expenses?

Those are the major things I would start to think about. (These are meant as rhetorical questions and not suggesting anyone should post personal financial information here.)

 

[tvguy]

Everyone's financial situation is probably different so what others say they plan to do may not be relevant to your situation. Instead, I would think about: 1) do you and your spouse (where applicable) work in relatively 'stable' jobs?, 2) are you near retirement or planning to retire soon?, 3) what debt do you currently have vs. your assets?, 4) any children about to start college?, 5) any major home repairs needed?, 6) planning any large medical expenses?

Those are the major things I would start to think about. (These are meant as rhetorical questions and not suggesting anyone should post personal financial information here.)

Good points. I would add this is the DIS where some have said $150,000 is a middle class salary.

 

[_19disnA]

^^ And cost of living varies based on where you live. Some of those threads turn into a 'can you top this' type of discussion...……..LOL.

 

[tinkerone]

As a retired banker I will give you my pre-retirement advice. It's the same no matter what, under any circumstance.
Always have six months of expenses in a savings account that is available at any time, meaning not locked in. Include any thing that needs to be paid in the 'expenses'. Mortgage or rent, car, water, electric, anything at all that you would have to keep if all your income were to dry up. You could always give up cable, cell and internet if push came to shove so you don't need to include that if you don't wish but make sure it's a true accounting of what you would need.
Then have some savings that you could use on a daily basis that is 'play money'. Have that available so that your not tempted to use your 'six month' savings when you want to go to a movie or dinner some night.
Then pay off your debt. Pay off the debt with the smallest amount owing no matter the interest rates. Some people will not agree with this but if you do it this way you will have one less bill to pay and then can apply that amount to your next smallest bill and so on.
This is the order I would have advised for anyone asking me but it may not fit your needs. Everyone is different and this is just an outline, suggestions. The six month savings though should be something everyone has on hand although it is not always possible for all.

 

[Southernmiss]

No changes here. No mortgage. Debt free. Stable jobs. Keep an emergency fund. Save for large purchases. Pay cash. Payoff credit card each month. Track and plan for spending. Stay on budget. Save for retirement.

 

[Mackenzie Click-Mickelson]

I forgot to mention in my prior comment we did refinance our home taking advantage of a smaller interest rate (ours was already low-ish) which was finalized early last month. We shopped around comparing loans with their fees and it was nice that we didn't have to pay for an appraisal. This was the second time we've refinanced the first being 2 1/2 yrs into the original loan to get rid of PMI.

 

[2China2009]

For the first time in a long time I am aggressively saving. I want $10,000 in savings just to have and to pad my checking account with another $3000. I have 3 months of an emergency fund working towards 6 months. I will have a fully renovated home and be mortgage free in 18 months at the age of 50. 2 beautiful girls who are adopted from China and paid cash for the adoptions at $30,000 piece in 2004 and 2008. Bought my home and final home in 1998 and paid cash $25,000 all new windows, siding and roof. I work as a RN making less than $45,000 a year, but have worked so hard to be where I am at today. Not many people can say that. Please continue to pray for us healthcare workers as this Covid can be deadly for our patients and us to.

 

[Happiest mommy]

We are doing a mix of the two. Paying off any debt and saving as much as we can thankfully we didnt take a hit financially as I was able to work from home and my husband being an essential worker never stopped working but since we were sheltered in place these past couple of months and everything was closed our savings went up, we are not looking forward to the Fall here in NYC and we are living scary and uncertain times, but this has brought my family more together.

 

[TarotFox]

We're young and still kind of starting out. We didn't really have an emergency fund and now we have a 3 month one. It was motivated extra by Covid, but truthfully speaking we were planning on doing this around now anyway. The only major difference is that I am now shooting for a 6 month fund. I was going to pay off our cars once we hit 3 months, but I am very likely to need leave from work because I'm not really coping with risking my life other day to serve people.

 

[crisi]

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...

We had our washer start to sound like a jet engine - it was fifteen years old - and the day I ordered a new pair, I called later that day to get a dishwasher - that was suddenly looking sketchy. Two nights later, my son called, he'd crashed his car - so we had body shop bills (luckily, it was fixed for a third of the price of any decent new car). My youngest moved into their first apartment halfway across the country, and is still in college, so there was $1500 in furniture and another $1000 in getting an apartment going. Getting their car across country required new brakes before the road trip. Its been an expensive quarantine - but I have saved money in haircuts and manicures .

I agree that in a recession cash is king. Pay down high interest debt if you can as well - and don't add to your debt, but prioritize cash.....cash will let you pay your mortgage if you get laid off.

 

[MickeyMouseCD524]

I'm aggressively bulking up our emergency savings but also throwing anything extra that I can at a federal student loan, but only because they've paused the interest due to the virus so we want to take advantage of that. We actually think we might have it completely paid off this year now.

 

[barkley]

I'm aggressively bulking up our emergency savings but also throwing anything extra that I can at a federal student loan, but only because they've paused the interest due to the virus so we want to take advantage of that. We actually think we might have it completely paid off this year now.

that's great on the projected payoff! my dd is actually at the point where she could pay in full the remaining balance on hers this year but when we were talking about it and the volatility of her job market right now we suggested that instead of paying it off she put her regular monthly payments and any extra monies she comes into (her stimulus check, tax refund and the 3 weeks she got unemployment that exceeded her normal take home pay) into a savings account. if the feds don't extend the no payment/no interest period then she will pay in full but if they do OR (not that i think it will actually happen) they do that $5000 forgiveness that's been talked of it can stay put, earn modest interest and act as a backup emergency fund.

 

[AlohaNow]

Talk about dumb luck. Just before all this began, DH started a part-time sales gig. It has proven to be extremely lucrative. In January we had only one paycheck coming into the house (his regular FT job), in February I started a temp gig, and in early March he started the side gig. So from one paycheck to three. We paid off $9,000 of debt in one month. Now we are loading money into savings like crazy. I’m ending the temp gig soon so that I can study full-time for a national licensing exam that I’ve been working towards for a year. Once I pass the exam and secure employment I’ll be making about 40% more than I’m used to making. DH also has to pass an exam this summer and then he’ll keep even more of his sales commissions. It is unbelievably strange to feel like we are drowning in cash in the middle of a pandemic. And I cannot tell you how good it feels to have our debt paid off!

 

[ClapYourHands]

Currently, our only debt is our mortgage. Since rates are low, it makes sense for us to keep the mortgage as is, and allow the other money to be invested or on-hand. We currently have a nice mix of savings and investments. DH really freaked out when the stock market tumbled due to CV19, but we're riding it out, and with market gains, I'm glad we didn't panic and pull it. I anticipate there will be continued volatility, but we have enough cushion in cash to weather another downturn. DH and I still have our jobs, though I know DH's income will be reduced due to reduction/temporary elimination of bonuses.

 

[hertamaniac]

I anticipate there will be continued volatility, but we have enough cushion in cash to weather another downturn.

We're already seeing the effects of that volatility. Once the companies start to report Q2/Q3 earnings, I am anticipating quite a big pullback across most sectors.

 

[ClapYourHands]

Good points. I would add this is the DIS where some have said $150,000 is a middle class salary.

^^ And cost of living varies based on where you live. Some of those threads turn into a 'can you top this' type of discussion...……..LOL.

I think that's why it's helpful to discuss in terms of 6-months of expenses rather than absolute dollars. $150,000 will have you living like royalty in some parts of the country, and stretching a bit to support a family in others.

 

[ClapYourHands]

We're already seeing the effects of that volatility. Once the companies start to report Q2/Q3 earnings, I am anticipating quite a big pullback across most sectors.

We were discussing this at dinner last night. Sometimes it seems like what's going on in the stock market is not connected to what's going on in the rest of the world.

 

[RamblingMad]

I doubled my savings on hand in the last three months. I’m considering doing a recast on my mortgage to bring down the payment. I can always pay more principal, but it would increase my monthly cash flow. Something I’m thinking about. I’m more worried about the economy in 2021 than 2020.

 

[Mrs.Reese]

My job is fine but hubby's may not be if school's don't reopen in the fall. We have a really nice cushion of cash that I am hesitant to spend but on the other hand I could payoff the last credit card. The downside is that it would drain about half the cash in the account.

We are in the strange situation where the house and cars are paid for but have credit card debt.

 

[Shelly F - Ohio]

You mention paying down debt but did not say weather you would be paying it off. That begin said it is best to save money so that if at a later date you suffer a reduction in your paycheck, the money you put away now will allow pay those debts and be able to avoid late charges and negative impact on your credit score.