Is it better to save or pay debt down?

[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. would i be better off saving this extra or keeping up the program. As I paid off a bill completely, I roll over that weekly amount to another payment (the highest balance or interest rate) to sustain the same outlay weekly. I have paid 80% of my total debt off in like 10 months with this plan(save my mortgage) but it is beginning to tax me in that 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)
what is the consensus? keep the status quo or start saving? My estimate is that I will be debt free (short of the car, student loans and mortgage) in febuary.

[gunlover05]

pay off debt, no question...not only is it the most finacially sound decision, it will help you sleep better at night

[onewhippedpuppy]

Agreed. You have an emergency fund, and you should be able to pay off the debt quickly. It's a no-brainer. Once you have the debt paid off, then you can leverage ALL of your income to save/invest. Just remember, you can always quit payments to savings if you have a hard month, but you can't quit paying your bills. The less bills you have, the easier it is.

[Rot 911]

Pay off the debt and then you will have even more money to save!

[Jim Richards]

At the rates the credit card companies charge, it always makes more sense (to me ) to pay them down/off. You're unlikely to achieve a comparable rate of return on your investments to offset the CC interest charges, so get rid of those pesky debts & interest charges as quickly as you can. Of course, make sure you have sufficient liquid assets to handle unexpected emergencies.

[NICKG]

thanks, once i have the debt paid, I can redirect these into savings. This online program is available to anyone with Chase, i honestly don't understand why everyone does not do it..I save my time, stamps and it makes paying my bills brainless

Eventualy the goal here is that I am hoping to be able to buy another home(and use this one we are fixing up as a rental). Really this seems to be the only real path to financial independence that most people can follow. My wife and I make a reasonable living (70k combined) with no kids(can't have any ) So we are trying to become financially independent and then adopt.

[onewhippedpuppy]

Nick, sounds like you're on a great path! Jim makes a good point, you'll never get PAID as much interest for your savings as you are PAYING for your CC debt. Knock them out, cut up the cards, and move on to enjoy life.

[mossguy]

Nick - Having been in a similar position several times over the years, I have found that paying off the CC's is the smart thing to do, but only works if you are operating with a realistic personal budget. (My 0.02 cent + 12.99% interest).

Tom

[URY914]

Here is a question that has come up between my wife and I:

Should we pay off our cc debt with all avaible funds or should we set money aside for pending expences like our kids private school tutuion or her up coming $1.5k for v-ball club fees? Should we be saving to offset future debt?

[NICKG]

Originally Posted by URY914

Here is a question that has come up between my wife and I:

Should we pay off our cc debt with all avaible funds or should we set money aside for pending expences like our kids private school tutuion or her up coming $1.5k for v-ball club fees? Should we be saving to offset future debt?

We have a similar thing, we are almost done with the house (just need to re sheet rock) except that we need a back deck built. The estimates are like $6000 for the deck. I have decided that rather than take out the $ from the savings/emergency fund, or take out from the payments, I will ebay all the extra stuff i have accumulated over the years...car parts, cycle parts etc...
Hope to have this raised by October with just ebay sales supporting it

[berettafan]

i mean this in the kindest way:

No effing way i'd drop $1.5k/yr on a sport with no future for my child while carrying credit card debt.

[URY914]

Originally Posted by berettafan

i mean this in the kindest way:

No effing way i'd drop $1.5k/yr on a sport with no future for my child while carrying credit card debt.

She has a strong future actually. She was on the National team and won the coach's outstanding player award. I have friends that spend much more on other sports on a kid w/o talent.

The cc debt is not that great.

[Tishabet]

$1.5k/yr is nothing... try having a kid who plays hockey.

[Porsche-O-Phile]

Originally Posted by onewhippedpuppy

Nick, sounds like you're on a great path! Jim makes a good point, you'll never get PAID as much interest for your savings as you are PAYING for your CC debt. Knock them out, cut up the cards, and move on to enjoy life.

I agree with this in principle but it's actually not 100% true. If you're careful and pay attention to your card offers, you can effectively ensure that any balance you carry is 0.0% apr by taking advantage of balance transfer offers. If you're paying a dime in interest, it's too much.

But you have to be disciplined enough to keep on top of it and actually put time into researching/applying/transferring/tracking all this stuff. If you do, you can save a ton.

As with a lot of things, the price of doing nothing can get pretty steep. Lazy people pay interest.

[berettafan]

i really didn't mean to be flippant in my response; just can't see dropping that kinda dough when it's borrowed from citibank or wamu or whomever.

perhaps i'll feel differently when my little guy is older.

[NICKG]

Originally Posted by Porsche-O-Phile

I agree with this in principle but it's actually not 100% true. If you're careful and pay attention to your card offers, you can effectively ensure that any balance you carry is 0.0% apr by taking advantage of balance transfer offers. If you're paying a dime in interest, it's too much.

But you have to be disciplined enough to keep on top of it and actually put time into researching/applying/transferring/tracking all this stuff. If you do, you can save a ton.

As with a lot of things, the price of doing nothing can get pretty steep. Lazy people pay interest.

we have been..I get them and we use them..that has been very helpful in doing this...I take the balance transfered themn divide it by the time frame in weeks till it has interest(...subtract 3 for good measure) and then it gives me the payment amount i should pay...so i save the interest on that sum.

[URY914]

The credit card companies are geting wise to this. It's not as easy as it used to be.

[therotman]

Originally Posted by Porsche-O-Phile

I agree with this in principle but it's actually not 100% true. If you're careful and pay attention to your card offers, you can effectively ensure that any balance you carry is 0.0% apr by taking advantage of balance transfer offers. If you're paying a dime in interest, it's too much.

But you have to be disciplined enough to keep on top of it and actually put time into researching/applying/transferring/tracking all this stuff. If you do, you can save a ton.

As with a lot of things, the price of doing nothing can get pretty steep. Lazy people pay interest.

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.

[onewhippedpuppy]

Originally Posted by Porsche-O-Phile

I agree with this in principle but it's actually not 100% true. If you're careful and pay attention to your card offers, you can effectively ensure that any balance you carry is 0.0% apr by taking advantage of balance transfer offers. If you're paying a dime in interest, it's too much.

But you have to be disciplined enough to keep on top of it and actually put time into researching/applying/transferring/tracking all this stuff. If you do, you can save a ton.

As with a lot of things, the price of doing nothing can get pretty steep. Lazy people pay interest.

I find it much easier to pay off the small balance on our one card each month.

[Jim Richards]

ditto