I keep hearing stories of how bad things are right now. I have friends who have been laid off or had hours cut in their jobs, interest rates on savings accounts keep going down, and I have been purposely avoiding listening to news about the stock market. Closer to home, I’ve had some of my various sources of part time income decrease as things are cut back due to less demand or less funding. We’ve made a commitment to some savings goals for this year, specifically increasing our emergency fund and saving for a new-to-us car. At the beginning of the year, I was optimistic that we’d be able to do both those things by halfway through the year and then focus on eliminating our last non-mortgage debt, my student loan.
But here it is, the middle of March, and with a combination of personal tragedies and less income, we’ve not made any progress on saving for a car, and the emergency fund is at about $1500 (goal of $2500). The first goal still is to increase the emergency fund to $2500, which is my primary March and April financial goal. But saving $10000 for a new-to-us car will not happen by June, and may not even be feasible in 2009.
Which makes me want with all my heart to change that goal #2 to “eliminate student loan debt” instead of “save for new-to-us car”. This last non-mortgage debt is like an albatross around my neck. I hate that I even have it, and I sincerely want it to go away. Part of simplifying our life is to simplify our finances, and one less obligation to pay is another step towards that. But of course, my head says “If the car dies, then you’ll just add another debt instead of getting rid of one if you’re not prepared.” And with the country on such shaky financial ground, I should want, rationally, to hoard my cash at hand just in case things become even worse for us financially before they get better. But instead, my heart wants to be free of this last non-mortgage debt and accomplish my debt freedom goal.
So my heart and my head are at war. Until we’ve met the $2500 emergency fund goal, I can continue to let them war it out, and see which ultimately wins in the end. Do you have a savings vs debt elimination debate of your own?