As we all probably are aware of, saving money versus paying off debt is a hot topic among personal finance bloggers. I recently came up with a financial plan that should help me be prepared in the instance I lose my job due to the merger. I had initially decided that I was going to pay off the last remaining student loan over nine months. As the economy keeps getting worse, I can’t help but feel that maybe I should hang on to as much extra cash as I can. I decided I’m going to change my plan of attack.
I’m going to do a “reverse debt snowball”. I’m going to take the money that I was going to put towards that student loan into our savings account. That way, if we absolutely need it, we’ve got it. If not, in six-nine months, if things are better I can take that money out of savings and put it right onto that student loan.
I thought about starting a separate account to keep those funds separate, but I currently am earning 4% on my savings account at my brick and mortar bank. I would rather earn that 4% interest and have the peace of mind than not have that money later on if we absolutely need it. I think this will be the best plan for us, but I know it’s going to be hard to take that money out of savings and pay on the loan. Of course, if things are looking up then I think it will be much easier.
Here’s hoping that the economy turns around in a few months!