Get rid of the debt first. I think you should try to have a small savings account just for unexpected expenses but....once you get a decent chunk saved ($500-$1000) take it and make a big one-time payment towards your debt and pay it down. The more you pay down your debt, the more you can actually save as you're not paying near as much interest each month.
Find your lowest interest credit card and use that if necessary to pay the unexpected expenses. Also, once you have balances lowered somewhat, look for cards that allow "interest-free" time periods of 12, 18, even 24 months for balance transfers. You usually pay a 3% fee up-front on balance transfers but you'll more than make up for it by what you save in interest over that time period. Plus, you'll simplify your life by being able to just send money to one place, rather than a dozen.
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You're raising beautifully the dilemma between paying off debt that has high(er) interest, so is costing you more, and putting aside an emergency fund to cover emergencies like lay offs or the car that you need for work breaking down. Finding cheaper ways, through things like low interest or no interest credit cards, to cover the debt is an excellent idea.
!ENGAGE 20
ENGAGEtokens.Hello @dagger212 I have tried both ways of paying off debt first, then saving, and paying debt and saving at the same time. Early on, I found the most efficient way for me was to pay debt and save. After 6 months of savings, I would take that amount and pay down the debt a little more.
I found that it did me no good not to save. One reason was that borrowing again was refused either for being too close to the credit limit or debt to income ratio was too high. So I definitely needed the savings along the way.
You make a good point with the balance transfer feature for new cards that give a grace period. The key is to pay the transferred amount entirely within the "no interest" grace period. I took advantage of that option too.
However, this is my true story. I applied for a particular "no interest" debt-consolidated card. The caveat was that we couldn't incur any additional debt during the time period allowed to repay. In our eagerness to secure the consolidation, we agreed. Of course, as with all things that happen unexpectedly, we had to borrow some additional funds from another source. The issuer cancelled our card, reinstated the revolving interest which was over 20%, with a high monthly payment. Devastating blow.
Any credit option that helps in a particular situation should be a viable consideration.
Thanks for sharing your thoughts.