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VickiFool said:

Will your savings earn more than 8%, guaranteed? Then save. (Probably need to figure the after-tax earnings.)

AF Says:

Yes, I've thought about it like this. It's pretty close, but it would favor me a little to pay off the debt. BUT, I know that I need to build up some cash for a downpayment on a home, too. Paying it ALL out to my debts would be worse than retaining some in my money market, according to lenders and realtors. I've heard that you're better off to have "some" (a little!) debt and a little cash in the bank, rather than have NO debt but NO savings. They want to see that you have some cash left to live on. Plus, WHILE we're saving it, it makes a nice little emergency cushion. : )

VF said:

If not, then pay off the debts. Avoiding paying interest is as good as earning interest. And it is guaranteed! The only time I don't advise this is if you WILL save for the house but you will NOT pay off the debts. Some folks do that.

AF says:

I don't think we'd get out of control if we save the money rather than put it towards debts. I've got a mental "account" of it within the money market account, and I "save" every month. Saving in round numbers makes it easier to track in my head. "If it's July then $X of my available cash is saved ONLY for our future home."

VF said:

GOOD FOR YOU!! I've got a friend I suggested that to in January and she hasn't called her CC company yet. She found a company that will give her a better rate, but she hasn't sent in the forms yet. Aaargh! We're giving a financial workshop together in August.

AF says: Some people just don't get it and won't help themselves. Beyond offering the insight in the first place, there isn't much you can do but remind her gently a few times, and then let it be. : l

Vickifool -- noticing once again that the people who think I give good advice are already following it.

AF says: Heheheh... too true. But thanks for helping me assess our situation. It is good to be "challenged" like this and come out finding that I *am* on the right track.

--AF, who is impatient, but STILL isn't willing to give up her inexpensive bubble bath soap, because live wouldn't be worth living without it! : )
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