Savings vs. Debt Repayment

Throughout my financial journey of sometimes living from paycheque to paycheque to now being able to have a growing savings account, when I have come into some extra money {small celebratory dancing commences} I have often debated whether to put it towards debt repayment or towards my savings.

This windfall of money may have come from either a third payday in one month; a second job or a bonus at work, even a surplus from your income tax return.

When this happens, it’s such a rewarding feeling when you have that extra money to play with, the possibilities of where to spend it start floating through your mind, you ask your friends what they would do: buy clothing, maybe get some oh so fabulous new fall boots or some concert tickets.  Or the not so instant-gratification, and yet responsible idea, of putting it towards debt repayment.

In my opinion, and this is just my Type A personality talking, but I like to cross items off my financial and mental To-Do lists and getting rid of my debt is one of those items.  I have worked so hard to get rid of my debt that seeing the light at the end of the tunnel and knowing it will be paid off shortly is such a great feeling.  It’s like winning a mini lottery knowing you’ve broken the chains and are now free from that re-occuring debt, hounding you for more of your hard earned money.

Here’s an article form Money Sense that I found interesting where it outlines in a nice organized chart, when it’s a good idea to put your money towards savings and when to put it towards debt.
www.moneysense.ca/debt/picking-priorities-debt-repayment-vs-saving/

What would you do?

What have you done in the past with some extra money?

J.

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