Tweet
I have a hard time saving money, I spend quite a bit. My questions is im about 2200 dollars in debt in credit card bills. I have 6000 dollars in savings, Should I pay off the credit card debt with the money in the savings? I think its easier for me to pay off the 2200 in credit card debt than for me to save the 2200. I know I pay more interest that I make on the 6000. But just wondering what you guys would do?
-
-
Math will tell you to pay it off due to the interest that you are paying. But, before doing so make sure that you do not deplete your savings too much. How much does $6600 represent for you in terms of an Emergency fund? If you can pay off the card and still have a minimum of 3 months expenses in savings, then pay it off. If not, then continue to save until you have a fully funded EF, then pay off the card.Brian -
Are there any expenses you can put on hold? For example: maybe you don't eat out, or get coffee, or whatever. Maybe you can sell a few things. Pay as much as you can toward your debt using this money without touching your $6k. Or you can use $1k from your savings in addition to the money freed up.
What are you going to do with respect to your credit card usage going forward?Comment
-
Absolutely pay it off. The interest you are paying in the credit card is higher than the interest you are earning in the savings account. Plus, being in debt is no fun and why owe money if you don't have to.Comment
-
I'm with everyone else... pay off the credit cards! Other than ensuring you have enough in an emergency fund, there's no advantage to holding the extra cash. Quit paying interest to the credit card companies and pay them off!Comment
-
Like everyone else said, pay off those cards asap.
Comment
-
Pay off the credit cards.
If you're carrying credit card debt month to month, it will grow to even more than $6600 due to interest. Pay the darn thing off and vow not to carry that kind of debt again.Comment
-
Paying off credit card bills is like getting rid of a 800# gorilla on your back. Emotionally it feels so good. If you are paying on several cards especialy, you are making it harder on yourself because of having to meet so many minimum monthly payments. If everything was on one card depending on your interest rate, the minimum monthly payment on one card should be way less than the minimum on several. So with several cards, your money isn't going as far to pay off bills. Try to come up with the extra money to get them paid off, if possible, but if not I would pay off at least the smallest balances owed, even if you are left with one card to continue paying off as you really don't want to raid too much from your savings. With the cards paid off, put the amounts that you were paying into a savings vehicle automatically if at all possible to help you out with the problem you have saving. Then leave those babies at home!Comment
-
I'd pay it off today, and keep it paid off each month going forward.
Worst case scenario, you have an emergency and have to borrow it right back, leaving you right where you are now. Best case scenario, you save tons of interest, and build back up the EF so that you don't need the card anymore.
But that last bit is key: build back up the EF after you pay off the CC. I don't mind using a CC as a temporary EF during a transition phase, but one of the goals of an EF to help you avoid taking on debt in the event of an emergency.Comment
-
I think the whole idea about emergency fund is somewhat outdated. While it's not a good idea in general, at this point in time your credit cards could be your emergency fund. There's no reason to keep paying interest just to save money for emergencies even though you can use the same credit card (which is now paid off) for an emergency.Originally posted by bjl584 View PostComment
-
So what is your plan in the event of a financial emergency? Cash out your retirement accounts? Borrow at 22%? File bankruptcy?Originally posted by Max G View Post
What is your plan?Comment
-
I disagree, and I'm sure most here will disagree as well. An emergency fund with a credit card may fix the original emergency, but it saddles you with another: payments.Originally posted by Max G View PostComment
-
Pay off the card. You definitely will save on the interest given your current situation. Find some techniques to help you curb your spending.Comment
-
What drove you to $ 2,200. in CC debt? What type of things were you buying without paying the bill in full when due? How much have you been paying in interest charges/fees? Have you created your own spending plan budget/cash flow that includes monthly and intermittent costs? Are you contributing to your future retirement? In the last century, when defined pension was the culture, employees had 12% of income automatically deducted for retirement. Now we are able to control both contributions and investment product.
I too support using savings to clear the balance with a plan to contribute new money to rebuilding savings to at least 3 months of expenses, depending on your specific circumstances. It helps to plan spending so that you are buying the items you need and serve you. Many of us have an 'allowance' for fun and entertainment, when that sum is gone so is the spending until next payday! In our home we pay ourselves First! Savings come off the top and then all the bills are paid, finally at the end of the month, anything left is swept into the linked savings account.Comment
Comment