My husband and I have $2,900 (limit of 3,000) on a credit card with 4.99% interest and $4,400 (limit of 6,000) on a second credit card with 10.9% interest. I know it is best to paying off debt as quickly as possible to avoid pay too much interest but we also have a baby on the way, due in March of next year. Would it be better to put everything we have into getting ourselves out of debt before the baby comes or paying the minimum + 50.00 just to maintain a good score and put the rest into savings? We already have a four year old, so I know how expensive babies can be.
The balances are too high, so I can't transfer them to the lower interest card yet, but I am dying to get out of debt. At the same time it seems selfish to think about our debt when there is a baby on the way. I can put 500.00 into debt reduction, 250.00 per card. Or I can pay the minimum and put the rest into savings. What would you do?
2006-10-18 14:31:06 · 13 answers · asked by tiger_lilly33186 3 in Business & Finance ➔ Personal Finance
You need to find a happy medium. You shouldn't use all of your spare income paying off the cards and leave yourself with no "extra" money when the baby arrives. At the same time, paying the minimum only will keep you in debt for several years, which is also no desirable. Try $150 or so on each, and save the rest. That way, you've got diaper money in the bank, and your balances are still going down.
2006-10-18 14:42:00 · answer #1 · answered by wildraft1 6 · 0⤊ 0⤋
You are most likely spending more in interest on you debt than you are receiving in savings. In the long run your best bet is to pay off your debt and then start saving. Another way to save a little money is to review your monthly expenses. Take one month and write down EVERY PENNY you spend and see where it is going. That's right, EVERY PENNY, write down all of your rent / mortgage, utilities, fuel, food, subscription, donations and anything else that you spend money on. Once you have this, sit down and review what is actually necessary. Example, do you really need the movie channels? Can you survive a few months without them? Did you know that the $10.00 each month you spend on movie channels could knock off hundreds of dollars in interest over a few years on your debt? Don't look at this as though you will never be able to enjoy life because you will. You can get the movie channels back later and trust me, you will value them much more after you realize what you had to do to get them back and you will be debt free to boot! There are many ways to save money. Do you really need to eat lunch out every day? How about bringing a bag lunch? You can buy lunch for a week if you bring it from home for about the same amount you would if you eat out for just one day. I know it seems hard to do and you feel like you are loosing everything in your life that you are working so hard for but in the end it is worth it because you know that you own everything and you are not paying three or four times as much for it in interest. Hope this helps, good luck!
2016-03-28 01:05:12 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The bottom line is this: You'll be able to save a lot more money in the long run if you pay off the debt and then resolve to stay out of future debt! High interest rates are what keep these guys in business . . . why do you think many stores give you 10, 15, even 10% discount if you pay with their credit card . . . because they assume that a large percentage of buyers won't pay the full bill at the end of the month . . . and thus begin paying 15 or 20 percent interest on the bill; thus negating the savings. ETC!
2006-10-18 14:53:04 · answer #3 · answered by worldinspector 5 · 0⤊ 0⤋
As much as you don't want to hear this, paying off debt should be first and foremost. Just think how relieved you will be when in 6 months or so you are debt free vs. 6 years if you keep paying the min. balance. You should try and pay yourself (save) too but maybe only 10% till your debt is gone than you can save the 100's a month you were paying to the CC co.'s.
Bad debt holds you back whether you know it or not. It's like a weight.
2006-10-18 14:36:32 · answer #4 · answered by escapegrl1 3 · 1⤊ 0⤋
I got a card from Washington Mutual with 0% interest on balance transfers for a year. I transferred my 2 high interest cards. My limit is $4500, my combined balances were $1200. I cancelled the high interest cards, cut up the WaMu card after I transferred and I am paying that off within the year.
2006-10-18 14:41:40 · answer #5 · answered by Anonymous · 0⤊ 0⤋
your interest rate isn't too bad at all and you really aren't in THAT much debt. Do you own your house (I mean buying or renting) you should do fine by saving and paying the additional $50. Good Luck on the new baby!
2006-10-18 14:46:08 · answer #6 · answered by Midge 7 · 0⤊ 0⤋
It would probably be best to pay of as much of the debt as you can; not to say you might still put some in savings.
Like you said with the interest can bury you and hospitals do not charge interest.
In order to take care of the baby you must first take care of yourself.
2006-10-18 14:42:37 · answer #7 · answered by Grev 4 · 0⤊ 0⤋
Pay off the higher rate card first, make the minumum payment on the 4.99% one until the 10.9% is paid.
If you really, really need money after the child is born, you can charge to the card then.
2006-10-18 14:40:33 · answer #8 · answered by Anonymous · 0⤊ 0⤋
You number one goal should be to get out of debt. If you don't pay off those high-interest credit cards, you'll end up paying thousands more and be in the hole forever.
2006-10-18 14:39:59 · answer #9 · answered by Bill P 5 · 0⤊ 0⤋
Pay as much as possible into the high interest one. 4.99% is lower than a lot of banks are paying for CD's so don't be in a big rush to pay that off.
2006-10-18 14:39:10 · answer #10 · answered by Nelson_DeVon 7 · 0⤊ 0⤋