Reduce 401K contributions to pay off student loans faster?

[lootpacman]

Pay off 0% CC or one of student loans

I am in bit of a snag.

I now have $2.8K in CC debt on a 0% interest CC until early next year.
I have $6.6K in emergency fund.
I have $21.5K in student loans.

My student loans are already paid for this month.

I would like to use $1K to $1.2K to pay off my CC with a $2.8K balance.

But since the CC is 0% interest I am wondering if I should just apply that to my student loan that has a balance of $6.5K @ 6.5% interest. And then slowly pay off the CC before the 0% interest offer expires.

Any suggestions?
Thanks,

LP

[bjl584]

I am in bit of a snag.

I now have $2.8K in CC debt on a 0% interest CC until early next year.
I have $6.6K in emergency fund.
I have $21.5K in student loans.

My student loans are already paid for this month.

I would like to use $1K to $1.2K to pay off my CC with a $2.8K balance.

But since the CC is 0% interest I am wondering if I should just apply that to my student loan that has a balance of $6.5K @ 6.5% interest. And then slowly pay off the CC before the 0% interest offer expires.

Any suggestions?
Thanks,

LP

I'd probably put it toward the SL. Remember, the interest rate isn't exactly 6.5% if you itemize your taxes. It will be a bit lower. But, I'd still put it toward the SL. Stretch the 0% CC as long as you can.

[DaveInPgh]

I agree with Brian but also make sure you don't let that CC debt continue to grow.

[autoxer]

I am in bit of a snag.

I now have $2.8K in CC debt on a 0% interest CC until early next year.
I have $6.6K in emergency fund.
I have $21.5K in student loans.

My student loans are already paid for this month.

I would like to use $1K to $1.2K to pay off my CC with a $2.8K balance.

But since the CC is 0% interest I am wondering if I should just apply that to my student loan that has a balance of $6.5K @ 6.5% interest. And then slowly pay off the CC before the 0% interest offer expires.

Any suggestions?
Thanks,

LP

Why has your CC debt grown so much since april? Are you going to be juggling a new 0% offer 5 months from now to keep the cycle going?

Schedule out the payments that you would like to make to pay off the CC before it accrues interest. If you are comfortable with the cashflow then go for it.

You can absolutely save a few bucks by juggling the payments, but consider how much interest you are actually going to save. Diverting $1k to the student loan instead of the CC will reduce your interest cost by ~$32.50 over a six month period. Is the added complication of continuing to juggle the CC payment worth it?

Here is another perspective, if you had no CC debt and a $3.8k emergency fund, would you take out a no interest loan for $2.8k to pad up your emergency fund. Some people like to play interest arbitrage, but I don't see a lot to gain by it.

[Jluke]

I'd actually put it towards the CC since there is more inherent "risk" there when it comes to interest than the student loans - they're not going anywhere and you're only talking a few months...

Unless of course $2800/"time to expiry" = monthly payment you can manage with 0 threat of being charged interest on the CC, then consider the Student Loan.

Edit: after seeing autoexer reply, yeah definitely the credit card... and don't use that card any more unless you pay in full each month. bad habit.

[LivingAlmostLarge]

Keep 0% to end of offer. Pay down SL instead. I would also look into saving into a Roth IRA before contributing more to 401k. But at least get the match.

[lootpacman]

Why has your CC debt grown so much since april? Are you going to be juggling a new 0% offer 5 months from now to keep the cycle going?

Schedule out the payments that you would like to make to pay off the CC before it accrues interest. If you are comfortable with the cashflow then go for it.

You can absolutely save a few bucks by juggling the payments, but consider how much interest you are actually going to save. Diverting $1k to the student loan instead of the CC will reduce your interest cost by ~$32.50 over a six month period. Is the added complication of continuing to juggle the CC payment worth it?

Here is another perspective, if you had no CC debt and a $3.8k emergency fund, would you take out a no interest loan for $2.8k to pad up your emergency fund. Some people like to play interest arbitrage, but I don't see a lot to gain by it.

I bought a few things over the summer for work and projects (ex. laptop, bike etc) the rest was just putting things on the card because of no interest, so it's from big purchase items versus frequent spending.

I thought about leaving the card at home in a drawer for the next few months to avoid further purchases.

[DaveInPgh]

I thought about leaving the card at home in a drawer for the next few months to avoid further purchases.

Good idea

[lootpacman]

Keep 0% to end of offer. Pay down SL instead. I would also look into saving into a Roth IRA before contributing more to 401k. But at least get the match.

I'm currently matching the amount.

Why Roth IRA before 401K? I thought the 401K was pre-taxed, so I get to save more money before taxes are withdrawn from my paycheck.

[lootpacman]

I decided to apply the $1.2K to $2.8K CC debt. As some people mentioned above to eliminate the risk of when the 0% offer ends and this CC would have 17% interest (I have much lower interest CCs).

I'm still applying extra payments to SL since I mentioned a few months ago.
Will tuck the card away for now.

Thanks,
LP

[GoodSteward]

I decided to apply the $1.2K to $2.8K CC debt. As some people mentioned above to eliminate the risk of when the 0% offer ends and this CC would have 17% interest (I have much lower interest CCs).

I'm still applying extra payments to SL since I mentioned a few months ago.
Will tuck the card away for now.

Thanks,
LP

I would have recommended the same thing that you did. Back in June I spent 900$ on some music equipment and put it on a 0% for 3 years card through the company. I figured why spend the money if I don't have to? I just paid it off this week, just three months of payments later. I don't care if It is 0%, I can't stand the idea of owing it. I prefer to treat it like a bandaid and just rip it off my balance sheet as fast as I can.