Keep saving or pay off some debt?

Submitted by Marshellohello t3_10q75gz in personalfinance

As the title states should I keep saving or pay off some debt? I currently have about 8000 in savings and I owe 6055 on my loc and 1300 on my CC. My wife (28f) and I (30m) are expecting our first child in about 6 weeks and she’s going on maternity leave for 1 year (Canada) so she will be down to 55% of her wage it would be nice to get a chunk of this debt off our chest, although we do have 28,000 loc we used to do a bunch of Reno’s in our house this summer, my wife has a car payment I do not, I’m able to walk to work so we only have 1 vehicle and only planning on buying one for myself with cash once she goes back to work.

So should I keep saving over this next year or pay off this debt? I’m not sure about draining savings considering we have our first child on the way and my wife being Down to 55% of her income. My wife drivers over 80km round trip to work 5 days a week so we won’t have such a big fuel bill either the next year

Thanks!

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mrdonaldglover t1_j6o8dd6 wrote

What’s the loc interest rate.

Credit card debt needs to go.

How is your budget going? Saving?

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Marshellohello OP t1_j6o9cik wrote

Loc has been on a rise lately it’s a 11% was at 8% this last summer :/

Saving is decent I try and save about 1000-1200 a month if I can ( I recently sold my truck that I was making payments on) I have a goal to have savings at about 15000 come July/august

Most of baby items have been bought witch before it cause saving to be slower witch is fine and expected

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mrdonaldglover t1_j6o9y3o wrote

It’s gunna feel uncomfortable but just pay off both.

If your LOC was at or below 5% I’d say you could honestly pay just a fraction to speed it up.

But that 11% is gunna kill you long run.

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Marshellohello OP t1_j6oat3p wrote

Yeah it really sucks that the interests rates have been on a rise here.. would be nice get it over with, but then on the other hand I might just wait a couple months? See how it is with my wife being on half her wage?

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mrdonaldglover t1_j6ofckp wrote

Aslong as you get rid of the CC debt asap.

You really shouldn’t be saving so much until you are debt free. Maybe check the prime directive for more help.

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Marshellohello OP t1_j6ofo1a wrote

Okay thanks for the advice, I could pay off my CC today then start splitting my saving payment do 500 to savings 500 to loc

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ct-yankee t1_j6ol8k3 wrote

While the interest rate on the LOC is high, you have a significant life event coming (congrats about that!) and that has to factor in here.

If it were me, I would absolutely pay off the credit card today to stop some of the bleeding. I'd keep a chuck of the savings in place for emergencies and just in case before your child arrives.

Then, when you have your child home and things are settled, your budget is known etc. then you can make adjustments you are comfortable with and perhaps run at the debt again. You've got this.

As you look to pay down debt, dont forget to keep the car payment on the list too. The sooner you are without high interest debt, the better off you are.

Best wishes to your growing family, wishing you health, peace and prosperity!

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