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    Pay or save?

    I have a small amount of credit card debt that has been hanging over my head for a couple of years. I have used it for emergencies in the past with my kids and found that I haven't used it in a year or so. My question is this. Should I focus on using my extra money to pay it off as soon as possible? Should I make small payments on it until it's paid off and continue to contribute regularly to my savings? Should I put my savings aside for now until I pay it off? I usually contribute at least $100-200 a month to my savings.

    Debt: $2,576.11
    APR: 0% until February 2013. (Should I look into a balance transfer?)

    #2
    How much do you have in savings? If you paid off the cc in full would you still be left with at least a 3 month emergency fund? If yes, then pay it off before the 0% interest runs out. Only do a balance transfer if there are no fees associated with doing so, or if the fees would be less than any interest that you would incur by the time that you can get the debt paid back.

    We will need more info on your financial picture to be able to answer properly.
    Brian

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      #3
      I agree with Brian - you don't want to drain all of your savings because then if you have an emergency you'll be stuck using your credit card again. As he said, make sure you have a couple of months worth of expenses saved up before you knock out the card... but get to working on it so you can take it out!
      Current Status: Traveling North American in our 1966 Airstream. Check out the remodel here.

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        #4
        Redirect whatever free funds you're comfortable spending towards paying off the CC. Your savings account is generating a few % on the interest at most, but your CC debt is costing you 11-25% per year.

        Depending on the overall balance of your savings, I'd take that 100-200 a month and put it on the credit card instead.

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          #5
          I would make sure that you have $1000 in saving and then focus the money towards the credit card debt. After that start to build a 3 to 6 month emergency fund so you don't dip into the credit cards again.

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            #6
            Originally posted by Tree0164 View Post
            I would make sure that you have $1000 in saving and then focus the money towards the credit card debt. After that start to build a 3 to 6 month emergency fund so you don't dip into the credit cards again.

            This was my initial thought. I have around about that saved up in my Roth right now. I would rather pay off my debt before I begin to dive into savings for the future. I keep a savings stash in the house as well in case of emergencies. Unfortunately, I think I need to do a balance transfer in order to really tackle this credit card bill. Thanks for all the tips and feedback everybody!

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              #7
              Best Advice for you

              Pay off ALL Debt. Put savings on hold for now. One day there will be interest on that card and you do not want to waste your money on all that interest. Once you are debt free then you should save a minimum 6 months living expenses. That is a fund for emergencies only. Then throw away your credit cards.

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                #8
                Originally posted by ValQue View Post
                This was my initial thought. I have around about that saved up in my Roth right now. I would rather pay off my debt before I begin to dive into savings for the future. I keep a savings stash in the house as well in case of emergencies. Unfortunately, I think I need to do a balance transfer in order to really tackle this credit card bill. Thanks for all the tips and feedback everybody!
                Don't use the Roth as an emergency fund. That is retirement for years in the future.

                I would the balance transfer, get your $1k baby emergency fund set up and then be aggressive in getting the card paid off.

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                  #9
                  should pay the credit card before the interest rate changes even if it means depleting most of a savings, emergency fund and skating on thin ice for a little while. Once the rate jumps, it's going to be more difficult to stay afloat.

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                    #10
                    Can you temporarily trim some discretionary spending and redirect that, along with the payments you regularly make, to pay it off more quickly? Some of the categories that you might trim include: movies, dining out, starbucks, travel, maybe go a little cheaper on groceries if you can

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                      #11
                      If you have any bad credit earlier? If yes, then please pay debt first. Also if it is not a large amount then you should pay instantly.

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                        #12
                        If the OP has the money, then this card needs to get paid off first right away. She can then start saving for emergencies.

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                          #13
                          Pay your debts and start saving money. Try to strive hard not to engage in debt as long as possible. Debts can cause financial difficulties..

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                            #14
                            Def save

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                              #15
                              I will suggest you to contribute to your savings also keep aside your emergency fund but when you contribute $100-200 in place you contribute half of it and use the other half to pay off your debt though you will take some time to do it so but ultimately you can do both at similar time, cut the cost on both saving and emergency fund and utilise it to pay your debt.

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