radioactivebug
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| Pay Off Debt Or Save? |
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Hello,
I have about $10k worth of debt on one credit card with an APR of 9.99%. I just opened up a American Express Savings account with an APY of 1.5%. I have about $850 that I can split into savings and debt a month. What would be the best use of my money between the 2?
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Fri Jan 22, 2010 9:20 pm |
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oldguy
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I would put it all on the CC - you are borrowing money at 10% and using it to fund a 1.5% savings account - you are losing 8.5%, that's costing $850/yr.
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Fri Jan 22, 2010 11:12 pm |
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radioactivebug
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Thanks, but my thing is that I have NOTHING in savings and I'm finally at a point where I have organized my finances (it only took me 35 years). You think I should store away an emergency fund and then start crushing my CC, or just start crushing my CC?
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Fri Jan 22, 2010 11:32 pm |
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oldguy
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Crush the CC - you can use the CC for an emergency if needed.
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Fri Jan 22, 2010 11:44 pm |
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C9Consulting
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Kill the debt first. There's no point in saving if you're losing more money than you're making in interest.
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Sat Jan 23, 2010 1:36 am |
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radioactivebug
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Thanks guys!
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Sat Jan 23, 2010 5:21 am |
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asnetworksltd
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| Re: Pay Off Debt Or Save? |
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quote:
Originally posted by radioactivebug
Hello,
I have about $10k worth of debt on one credit card with an APR of 9.99%. I just opened up a American Express Savings account with an APY of 1.5%. I have about $850 that I can split into savings and debt a month. What would be the best use of my money between the 2?
You should kill your debts first.
______
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Sun Jan 24, 2010 3:39 pm |
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coaster
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While I agree with all the above, I think that from the standpoint of the OP's accenting the lack of savings, it seems to be a high priority for him. It's not going to cost that much in extra interest, but it's going to provide a sense of accomplishment and security if a small portion of that $850 a month that's available gets diverted into savings. The "bottom line" isn't always the absolute bottom line. There's more than just numbers that factors in.
~Tim~
Eye Candy : Why Whimsy
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Mon Jan 25, 2010 6:13 am |
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littleroc02us
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It looks like I'm the only one who has a different opinion. And I'll explain. My suggestion is to save for an emergency fund of $1000 and pay the minimums on the cc's until you are finished with it. The reason I would do this, is that if your car has problems or you have a medical expense you will be able to afford it and not have to put it on credit, further putting you into debt. I remember when I was working on paying off debt, our furnace went out, I wasn't worried at all, I just paid the bill off with a check. No more debt. Than once I funded my emergency account in the 4 month time frame, I started to put everything I could towards the smallest debt. I even had a garage sale to make some extra money.
Once you have that paid off, work on the next debt. I know that most people will work the percentages in this case, but I'm going more with the security of your life and the what ifs. Hope this helps.
“If you want to stay in debt forever, keep borrowing money.”
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Tue Jan 26, 2010 5:09 pm |
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AlFromLA
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just think about these two scenarios
1. if you pay off your debt, sure your credit will be good but what if your bank goes out of business and closes your credit card, and what if the economy gets worse and no one else wants to open an credit card for you? then what are you gonna do?
2. if you were to save money, then think about all the interest you will be paying over time to your lender.
In my opinion, the best way is to safe some money while pay off some of the debt that way you pay less interest on your debt, improve your credit score, get better cards and do balance transfer to lower APR. Also have some cash in savings for emergency.
Goodluck.
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Tue Mar 09, 2010 10:03 pm |
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littleroc02us
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quote:
Originally posted by AlFromLA
1. if you pay off your debt, sure your credit will be good but what if your bank goes out of business and closes your credit card, and what if the economy gets worse and no one else wants to open an credit card for you? then what are you gonna do?
Goodluck.
Since when do you need credit cards to make purchases? Business do except cash and there isn't any interest payments. In fact go to a Credit union open an account, get a bank card and only use that. It has the same protections as any visa credit card, but you only spend the money you have in your bank account.
“If you want to stay in debt forever, keep borrowing money.”
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Wed Mar 10, 2010 3:40 pm |
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Creditnet_com
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I would put into a savings account at least the minimum credit card payment each month and use the rest to pay down the credit card. Reason I'd do this is if an emergency came up and I needed to use my monthly $850 for something else, I'd have money in savings to cover my minimum payment that month. And hopefully, I'd have at least a few months' worth of minimum payments covered before I could start putting $850 towards savings/cc again.
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Thu Mar 11, 2010 1:20 am |
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