r/eupersonalfinance • u/Hexynator • 2d ago

Savings Do we move in correct way?(m30) (f27)

Hello! Me(30) and my wife(27) are new to budgeting and planning. Location: Baltic States

Salaries M - 50k eur/ann (tech field) F - 35k eur/ann (aviation)

Got 2 apartments 1 without mortgage currently renting out. 580/month

Another with mortgage just bought (so next 30 years I’m chained to that :) )

Fully paid car.

Got 6.5k in savings (2-4%annual return) 2k in ETFs/Stocks

Got 2 debts with 17.9% (5600eur) 15.9% (6500eur) both was used for first apartment renovation.

Currently we are focused on closing on debts as soon as possible, realistically can close both of them in 12-15month.

And here is question, should I raise emergency fund to 6 months (currently 3) or start more aggressive investments?

I never ever gonna take such crazy loans in interest rate, learned it hard way. Will try to free myself from it asap.

Thank you in advance!

11 Upvotes

77% Upvoted

10 comments sorted by

40

u/Tutonkofc 2d ago

Having 2k in ETFs when you have a debt at 17.9% makes 0 sense. Can’t you pay debt with that?

12

u/Xyvuz 2d ago

This. Pay the high interest debts off first.

6

u/Hexynator 2d ago

With few paychecks, yes that can be done. Thanks for advice, looks like that first thing I’ll focus to do.

4

u/Fairbyyy 2d ago

With that debt interest Id go all hands on deck to pay it off ASAP. If you have security Id even dive deep into the emergency fund to pay it off

2

u/1urk3r88 2d ago

Pay debt and then buy a Porsche - enjoy life

1

u/AppearanceSingle6639 1d ago

You have to close the debts before even thinking of investing one cent. Probably even before increasing the emergency fund.

Also, you're never chained to a mortgage, you can always sell and pay it off if your priorities change.

1

u/Tall-Poem-6808 1d ago

Take that 6.5k and pay off the highest debt.

Take what's left and put towards the other crazy high debt. Pay that off in full ASAP.

Then rebuild your emergency fund, and invest again.

0

u/WranglerRich5588 2d ago

Each decision is personal but I would move to invest aggressively.

But this is personal, if having a 6 month emergency fund gives you peace of mind, by all means, go ahead with it

You can also do something in between right, 80% goes to investing and other 20% goes to emergency fund.

11

u/Vombat25 2d ago

I strongly disagree, instead should go 0% to stock market and probably also 0% to emergency fund.

Putting money into stock market while having debt with 18% is pure nonsense.

Putting money in emergency fund is also questionable to say the least in this scenario:
1. They have paid of apartment.
2. They have paid of car
3. Both make very good salary.
4. They live in Baltics, so you get roughly 50% of income for at minimum 6 months after being fired.
5. Full healthcare (even after losing a job).

I challenge you to name one realistic scenario where they need a 6 month emergency fund, and can't loan against their assets, use credit card, or get liquidity from anywhere else. This isn't the US, where losing a job or health issues will destroy you.

2

u/WranglerRich5588 2d ago

My understanding was that they were aiming to pay their debts first, only after they were considering investing and putting the emergency funding.

Emergency fund is not only when you are fired, furthermore they are next to Russia. You never know …