Um, I was making the point that paying down debt is a GOOD idea right now.
And my point is that compared to current savings interest rates, pretty much all debt, including student loan debt, *is* high interest.
Obviously you can't just spend all the $$ on debt payment and none on savings (but again, that's true in *any* market). currently my position is socking away $800 per month, so I'm OK with spending an extra $250 on paying the car payment.
And you need to look at the situation, but many places will take the extra payment as next month's payment, instead of reducing the life of the debt (credit cards don't, but most mortgage, car, and student loan payments work this way). In this way, you can still "have" the extra cash in a way -- let's say you have a bill for $250 a month, and in one month you pay $1000 towards it. Now you've paid the current month + 3 more, so if you do need the cash later, you can still "have" it, because you can decide not to pay that bill for 3 months.
Given that CD's and savings accounts aren't even giving 4% at this point, it makes sense to pay down almost any debt you have, because it's all "high" comparatively.
Everyone has to figure out what's best for them. I also have family that can help in a pinch, though I don't want to be in that situation, of course! (and currently we have 6 months of expenses in savings, so again, it makes sense for us. In fact, it probably would make more sense to take some of that $800 a month we're saving and spend some more of it on paying down more debt, but we're cautious types).
I recommend Mary Hunt's Debt-Free Living as a really good book that talks about how to save even if you're swimming in debt, and how to make your own decisions about what's best.
Re: Your thoughts? (just curious)
And my point is that compared to current savings interest rates, pretty much all debt, including student loan debt, *is* high interest.
Obviously you can't just spend all the $$ on debt payment and none on savings (but again, that's true in *any* market). currently my position is socking away $800 per month, so I'm OK with spending an extra $250 on paying the car payment.
And you need to look at the situation, but many places will take the extra payment as next month's payment, instead of reducing the life of the debt (credit cards don't, but most mortgage, car, and student loan payments work this way). In this way, you can still "have" the extra cash in a way -- let's say you have a bill for $250 a month, and in one month you pay $1000 towards it. Now you've paid the current month + 3 more, so if you do need the cash later, you can still "have" it, because you can decide not to pay that bill for 3 months.
Given that CD's and savings accounts aren't even giving 4% at this point, it makes sense to pay down almost any debt you have, because it's all "high" comparatively.
Everyone has to figure out what's best for them. I also have family that can help in a pinch, though I don't want to be in that situation, of course! (and currently we have 6 months of expenses in savings, so again, it makes sense for us. In fact, it probably would make more sense to take some of that $800 a month we're saving and spend some more of it on paying down more debt, but we're cautious types).
I recommend Mary Hunt's Debt-Free Living as a really good book that talks about how to save even if you're swimming in debt, and how to make your own decisions about what's best.