I HAVE DESTROYED MY CREDIT CARDS....TOTAL BALANCE IS $4568.00. I WORK 40 HOURS PLUS WITH OPTIONAL OT...ABLE TO PICK UP MANY MANY SHIFTS...
INCOME TAX REFUND WILL BE $6500. SHOULD I PAY OFF CREDIT CARDS AND CONTINUE TO SAVE THAT AMOUNT I WOULD BE PAYING PER MONTH. OR SHOULD I PLACE THAT REFUND INTO A IRA? OR DO BOTH?
2007-02-22 01:22:37 · 9 answers · asked by DONNA M. W 1 in Business & Finance ➔ Personal Finance
Since credit cards tend to have high interest rates, I'd suggest paying off the cards and contributing monthly to an IRA.
2007-02-22 01:31:18 · answer #1 · answered by Don E 4 · 1⤊ 0⤋
Get rid of the debt first. You are probably going to pay more in interest on that debt than you would earn on the IRA money during the time it would take you to pay off that debt by making monthly payments. Besides, if you don't have the monthly payments to make anymore, you would be able to invest even more into an IRA or other investments.
You also need to start some sort of liquid savings plan so that you have something set aside for an emergency and you're not charging it on a credit card.
Pay the debt first.
Start a savings account second.
Invest in an IRA or any other long term investment third.
All three are important though.
2007-02-22 09:47:39 · answer #2 · answered by Faye H 6 · 1⤊ 0⤋
Pay off the credit cards! That will reduce your monthly debt and free up your cash flow. Put the rest into an IRA or part in IRA and $500 in savings....in case of an emergency. Try to deposit a small amount of each paycheck into a savings account. Even if it's only $25 per check, you will have $ in the bank before you know it.
The way I look at is if you are drowing in debt now there is no point in saving for the future.....at this rate you will never get there!
2007-02-22 09:30:09 · answer #3 · answered by Anonymous · 1⤊ 0⤋
You don't say if the IRA would be deductible or not. If it is deductible I would contribute to the IRA, $4,000 and then apply the additional $2,500 against the credit card.
The next step would be to change your withholding exemptions so that you are not giving such a large interest free loan to the government. If your withholding was $4,600 lower you would have had that money in your take home pay and you would not have the credit card balance.
The next step is to get rid of all but one credit card and only charge what you can pay each month. Pick a credit card that gives you cash back and that has no annual fee.
Good Luck!
2007-02-22 12:18:48 · answer #4 · answered by waggy_33 6 · 0⤊ 0⤋
Personally, I am a debt hawk.
Get rid of the credit card debt and then invest monthly in the IRA.
1) The interest on the credit cards are probably much higher than the rate on any investment.
2) A monthly contribution to an IRA allows you to "Dollar Cost Average" over the long run.
Just my opinion.....
2007-02-22 09:29:27 · answer #5 · answered by Wayne Z 7 · 1⤊ 0⤋
Definitely pay off the credit cards. The interest you are paying on that debt is probably much higher than what you will be making on the IRA. Use the rest of your tax refund to reward yourself for getting out of credit card debt. Then, open an IRA and contribute to it monthly with the money you were using to make credit card payments. Congratulations!!
2007-02-22 10:37:13 · answer #6 · answered by Lori 2 · 0⤊ 1⤋
Pay off credit card debt and put balance into an IRA. This will improve your credit rating to the point where you can get lower rates on things like insurance,loans,etc. It's a win-win if you have the fortitude to do it! Best to you! ;-)=
2007-02-22 09:32:17 · answer #7 · answered by Jcontrols 6 · 1⤊ 0⤋
pay off the credit card debt, then start saving. interest on the debt will far out last the interest on and IRA
2007-02-22 09:31:36 · answer #8 · answered by Cars 2 · 1⤊ 0⤋
pay off your credit card first. the rest, put into your IRA. leave one credit card though. (try making a hotel reservation without a credit card).
2007-02-22 09:33:39 · answer #9 · answered by the_quiet_storm2 3 · 1⤊ 0⤋