Should you use all your savings to pay off dedt?

we faced this problem too. we have some savings that we can used to pay off our house monthly instalments but we choose not to. we rather keep the $ and pay off the instalments slowly. we do not mind losing on the interest as we feel that it is better to have the cash in hand as we know how difficult it can be if we need cash suddenly and do not have them. it will not be easy to ask for a loan from friends or bank esp in the current economy.

A good rule to follow in this situation is to save up enough money to cover three full months of living expenses and bills. After you have enough money to live on for three months in the bank, you can use any extra money you make to start paying off your debt. Just make sure to keep the three months of living expenses in the savings account, then you can start using the money you would normally put in savings to start paying off the debts you owe. Once you get your debt down to a level you are comfortable with, you can start back putting some money in your savings account, while continuing to pay a little extra each month, or you can pay your debt totally off if possible, and then start saving again. That is a choice you will have to make when the time comes, but the less you pay out each month, the more you can save, so you may want to pay off as much as you possibly can before starting to save again.

I am so with you, fearing the worst in our economy is yet to come! I did dip into to savings (here in B.C. I am making little 2.45% on savings!) to pay down my Credit Card debts, as their interest rate is high....BUT I did NOT deplete my savings by a great amount. With the US economy in such a downturn...the residual effect in Canada is knocking on our door! And gloom is on the horizon! I am making NO unnecessary purchases...NO "wants"...just bare needs. Cheers!

debt is still your debt.you can't get away with it. for me, i would rather pay my debt first.my savings would not be a real savings if i still got some debt to pay.i can sleep better in a debt free life.then after that, start saving...