Come join me in my quest to live a happier more frugal way of life, while enjoying the more traditional family values.

Sunday, January 23, 2011

Dealing With My Debt In 2011

Debt Repayment Versus Savings ?

Yesterday I said that I would write a post about how I intend to cope with my debts in 2011. I have mentioned in the past that I am paying no interest on my debts as they are both in the hands of debt collection agencies. So already the damage has been done, the interest has already been slapped onto the accounts, and I still have both of these bad debts recorded on my credit record.
So am I in a huge hurry to pay these debts off, from a financial point of view NO, but I do want rid of them ASAP. But do I want to save some money YES, and when do I want to start these savings ASAP.
So therein lies my dilemma, I want, need and must have an Emergency Fund, a Holiday Fund and a long Term Savings Fund, and if all my money is going into debt repayment then I can,t have them. so here is my plan.

I have a personal debt I want to have paid off first so $100 a week is being put aside for this and I expect to have it paid off by the 25th of March, at the same time as I am paying of the personal debt I will be upping my Debt 2) repayment to $70 a fortnight and expect to be clear of this debt by 17th June. After my personal debt is paid off I am opening up a Car Fund into which I will put the weekly $100 payment and after Debt 2) is finished I will roll over the money from there onto Debt 1) and for the rest of the year I will pay $100 a week off of this debt reducing it greatly.
During the time I am doing this I will be putting.
$40 a week into my Emergency Fund.
$40 a week into my holiday Fund
$50 a week into my Long Term Savings fund.
$100 a week into a New Car Fund.

My end of year figures will look something like this.

Debt Repayments

Personal Debt $1,000 PAID
Debt 2 ) started year at $822.86 PAID
Debt 1) started year at $5,672 reduced to $2,672
Total debt paid in 2011 = $3,822.86


Holiday fund $2,080
Emergency Fund $1,000 ( may revise this figure )
Long Term Savings $2,500
Car Savings Fund $4,100

I will also have gotten my credit rating back by the end of April, so I,m happy with where I will be by 31st December 2011


  1. Sounds like a good plan. Paying down debt will increase your cash flow, and bring peace to mind. At the same time you ARE saving for a rainy day. I got a similar plan myself. Pay off my debt this year, while trying to build up an EF. Next year I can save a lot more without having to think about debt.

  2. Nice to have you drop by Alltid.
    I noticed earlier that I had a visitor from Finland, so good of you to leave a comment !!!

  3. I like your plan Maureen! It is important to have some money on had for emergencies and future purchases as well as paying off debt. Any possibilities of obtaining a second job part time to help speed up the process?

    ~~Thanks for your kind words and support on my blog,,,it is greatly appreciated~~ :)

  4. Sounds like a good plan. Good luck to you this year.

  5. Well done! I think you have a well thought out plan that will take you far!
    I know that you can get it done!

  6. Maureen,
    I like that you went all the way to the end of the year. It gives hope to my situation if I do that as well. I'm a big advocate for a savings account, and personally I would rather boost that than pay off my car loans. (I want to do both, but if I had a preference, it would be to save up cash).

  7. the debt vs savings dilemma is a really hard one. I think you have worked out a good balance with this plan.

  8. You plan sounds great! Saving vs. paying off debt is the ultimate PF dilemma, as both plans have benefits and drawbacks, and, really, we all want both at the same time :) Can't wait to see how you make it all happen!

  9. I think you have a great plan in place that allows you to fulfill all your goals. It is very well thought out. Thanks for sharing. I enjoy your blog.

  10. Thanks for your support, I am so excited to see what the year will bring for us all.

    Lisa I have a really heavy job, plus I am my MIL,s carer so perhaps the odd overtime hours but definitely not another job.

  11. Hi Maureen: we all face that dilemma. I have decreased savings somewhat and increased debt payments to shorten the term of my debt. But I really HATE saving less! It is great to see the year end figures and see those debts with a PAID beside them:) The following year will see you saving a LOT more as your cash flow will improve big time. Fantastic!

  12. Maureen:

    I am a big advocate of putting money into savings along with debt repayment. Having money growing in savings brings peace of mind in case of an emergency. Watching the debt amounts go down while you savings grows is very encouraging. I like your plan.


All spam will be deleted