Is it better to save or pay debt down?

[dd74]

I paid off my entire CC in one payment. Just got completely sick of the thing. None of my payments were going to the principle, so I just said "Screw this!" and wrote the check.

Not having that albatross hanging off me is the best feeling I've had in a very long time.

[nostatic]

why 4-5 cards? I have one card that I use (and get united miles for) and another that is backup in case of emergency. All the other ones are cut up and don't get used. I only carry a balance on the backup card and that is a couple $K sitting at 1.9%. I'll likely zero that out next month though. Then the extra money goes into the bank to try and replace the hole left by racing for the past couple years

[URY914]

All you boys should be commended for paying off you cc debt every month. But the thread is about having debt and managing it until it is paid off.

[nostatic]

WIth 4-5 credit cards with balances, my advice is to take the one with the highest interest rate and pay it down fastest while making minimum payments on the other ones. When it is paid off, cut it up. Repeat until all are paid off. Keep one card as a regular card, one as an emergency one. Ditch the rest of the cards. I don't understand the need for more than 2 cards.

[pwd72s]

It pleases me to read of so many posting here who make sound financial decisions, are working to become debt free. Debt free when entering or nearing retirement makes things much easier.

[NICKG]

these are not all m/c or visa..I have those and a few others(lowes and HD fior the house) that we use. There are some things that I cannot just pay off every month..the lowes for example has 0% interest for a year..so we use them for our home repairs (which have been substantial).
Realistically I asked more about what a better management would be, and it seems that i am going about it the right way. The problem with "cuting up the cards" is that as you do this and cancel off the accounts, your debt to cfredit ratio goes up...therefore as a result your credit goes down. For example, I have cancelled some cards with 0 balance that had 10k credit limits..when i pulled my next credit report (i do it every 2 months) my credit took a good hit as the balance to available credit went up.. so it is not just that easy. I am looking for a balance and to control these to my best benefit. I do make habit of dropping any card that has the highest intrest and did away with all Capital one cards when i read the horror stories involving them upping interest without warning to good standing customers(we had 7 total cap one cards...) I have also tried to cut down the ones with low limits to get rid of them.

The one card that I have absolutely refused to get is a gas card...no way am i putting gas on a credit card..that is just dumb

[NICKG]

Originally Posted by pwd72s

It pleases me to read of so many posting here who make sound financial decisions, are working to become debt free. Debt free when entering or nearing retirement makes things much easier.

Thank you...you just cannot beleive the satisfaction i get knowing that every month i move closer to being free...and how easy it REALLY is if you utilize the tools you have. we have gone from living check to check...being ripped off by a builder for a large amount of cash (70k total) ..having the house wrecked as a result to, almost all of out cards at the limit to being 95% done with the house...almost debt free and looking forward to life in 3 years

[nostatic]

Cut up the card, don't close the account.

I have credit cards that I got at various times for various reasons. Paid them off, cut up the cards, and never use them again. Doesn't mess with credit score at all.

I pay for all my gasoline with my CC. I get airline miles for it. But all my CC purchases are on that one card. I don't use any other ones.

[NICKG]

that is a good idea...

[einreb]

Originally Posted by NICKG

no way am i putting gas on a credit card..that is just dumb

There are a lot of people that would argue that.

We put almost everything we can on a credit card (one) and then pay it off each month. We then use the 'points' for travel. (thats a whole 'nother debate).

Pay down your cards. You can use available credit in an 'emergency' until you have actually funded some savings.

[pwd72s]

Originally Posted by nostatic

WIth 4-5 credit cards with balances, my advice is to take the one with the highest interest rate and pay it down fastest while making minimum payments on the other ones. When it is paid off, cut it up. Repeat until all are paid off. Keep one card as a regular card, one as an emergency one. Ditch the rest of the cards. I don't understand the need for more than 2 cards.

Good advice here. Cindy & I have 2 credit cards, Mastercard & Visa. We also have several gas cards. All get paid in full, every month, when the bills arrive. They key is to keep track of your spending, to treat the cards as the cash they really are.

Nick..Kudos to you. Keep it up! No debt is a wonderful feeling. Gas card...well, I'm about to leave on a road trip while Cindy has the kitchen remodeled. I can't stand the chaos of remodeling. I'll use the cards, but she will write the checks when the bills arrive. In other words, still treating the cards as the cash they are. I just don't feel comfortable walking around with a huge wad of cash...especially since this road trip will involve pool halls.

[Porsche-O-Phile]

Originally Posted by therotman

too many credit cards and and new credit cards will negatively effect your credit score. Even with no balance- they want to see just a few established cards that you use and pay on time.

If you are looking at buying a new house I wouldn't keep piling on new cards.

Agreed to a point - one thing that will help your FICO is having a low "utilization" % of available credit though. As with most things, there's a compromise. Sometimes the best thing to do is close accounts (to reduce the overall $ number of available revolving lines, even if utilization % is low), sometimes it's not (to show a lower % of utilization), sometimes it's to open new accounts, sometimes it's not. You have to research and determine what your most pressing need is at the time - for most, this is making DAMN sure they're not paying 20% or 25% or whatever the hell kind of criminal rate these guys are charging the indiscriminate these days...

Obviously the best thing to do is have one (or two) and simply keep a zero balance on it each month, but for those who find themselves carrying a balance, the best thing you can do is pay 0.0% APR and no fees. Doesn't matter how "wise to it" the banks are getting - there will always be someone out there willing to give you a 0% APR balance transfer, unless your credit is horrendous.

I'm just speaking from experience here. I've used the transfer method to good use in the past to rebuild after a layoff and resulting need to use my credit lines. It sucks, but it's called "making the best of a bad situation". I think that's more useful advice to some than simply looking down your nose at them and telling them what they probably already know (that the best thing to do is not carry a balance). I'm simply trying to provide some information that might actually have some real-world value, rather than snooty platitudes.

[NICKG]

exactly

[Joe Ricard]

Pay it off.

and this seems to be the general response from most here. It's also what I do.

[lukeh]

My wife and I put everything on a credit card...and I mean everything. We even have some of our bills automatically charged to our credit cards. We do this because we get cash back. Last year we earned over $1000 in free money. If I paid cash or check for all that stuff we'd be out $1,000 so I'll never understand why people think credit cards are bad. The cards aren't bad it's that people that abuse them or don't use them to their advantage that need educating.

ROTH IRA...best investment going. I'm amazed by the number of people that don't even know what it is. Use the ROTH and pay yourself first.

[NICKG]

i started to do this but with my debit card for my daily purchasing (food gas etc)..I have 34000 points already in less than 10 months

[JV911SYDNEY]

Originally Posted by NICKG

I do my banking online, with that, I can and do use automated payments on a weekly basis to pay my various debts. I have set it up to pay about 200-400 a month on various credit cards with fairly low balances(the highest is 1800) spread across 4/5 cards. i have a total debt of less than 6000.

given that the debit is on credit cards, i'd say pay em off

if the debt was deductible (i.e an investment loan) then i'd keep the debt, service the interest only, claim the deductions and use your savings to make other investments

[cab83_750]

Originally Posted by NICKG

.......I feel nervous when i have less than 1500 in my checking. I have always had 4 months moertgage in the bank in case of emergency (loss of job for my wife or I)......

You just reminded me of my nightmare. About 10 months into the marriage, I opened up the mail (my ex did the finances), and I saw a credit card. Honey, what is this cc for $1,200.00?

"Oh, just pay double the minimum."

"Don't we have tons of $$ in savings."

"Oh, yes. But I get nervous using that account."

"Well, let's not discuss this. Pay this off, I do not want to discuss it, just do it."

[Tidybuoy]

Nick, You're on the right track.

The only advice I can give is you might consider changing which bills to pay. It sounds like you are spreading your payment across 4 or 5 credit cards. You might consider paying the minimum on 4 cards and putting all the rest towards the remaining card (which should be the highest interest rate card).

I've been in the same boat more than once. I found it very motivating to get cards paid off. If I did like you are doing, it would seem to take forever. So, I did as I said above - except in some cases it's easier to pay a small balance and get that card done - then move on to the higher rate cards.

Even though the total balance may be dropping at the same rate - no matter what you do, I found it more motivationg to completely pay off a card and be able to say...I only have 3 left, etc...

[Hugh R]

I carried almost 10K in cc debt for too long. When I sold an old car for stupid money last year, I paid off the cc debt within five minutes of the check clearing. I will never carry a cc debt again if its the last thing I ever (don't) do. I put most charges on a United Visa card for the points, but am thinking that one over. I've had the card 20 years, and now there are some others that are more flexible in terms of where you can use the points. I've even though of charging not just gas, but groceries as well. I put $12K on it for flooring for the house, and paid it off when it came due. The flooring contractor, a local guy said he couldn't take the hit for the entire $25K on a cc.

Pay it off ASAP. I got in the habit, like many others, of buying for immediate gratification, and never quite paying it off. The structure of the cc financing is definitely stacked against you. If you carry a balance, you get charged from day one on interest for all new purchases until the next bill comes in.