My financial situation over the past 2 years has greatly improved. YAY!! but now I am at a crossroads. I have two large debts left to pay (2 cards. $1800 each). I have $5000 in savings to use. I liked the idea of holding on to the cash, just in case something like a car accident or some other catastrophie, but the prospect of being credit card debt free is awfully tempting. The $5000 is from my student loans, so I would have to pay it back anyway, but at least that won't begin for another 21 months. I know the money should be used to pay for classes, but I can always take out another loan, right?
What should I do?
2007-12-28 08:40:16 · 8 answers · asked by Anonymous in Business & Finance ➔ Credit
pay for the classes, if you pay off the cards, and get another loan for what the money was intended for, you are no better than you were to begin with.....
2007-12-28 08:48:52 · answer #1 · answered by kaycee 3 · 0⤊ 0⤋
You actually DON'T have any savings to use, as the money you have is borrowed. Savings is money that is your own, which the $5,000 is not.
I would encourage you to stop taking out loans and pay for your classes. Since your financial situation is better, work towards paying off the two two $1,800 debts. While doing that you will learn how to use your money more effectively. I think that you should, before paying off the debts, build up an emergency fund of $500 to $1,000 first. That way if something comes up it won't throw you off track.
2007-12-28 10:41:09 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Use the money for classes and stop taking out excessive amounts of student loans. You have to pay those back. It is really a bad idea to borrow money to pay off debts. You just shift the debt around.
Instead, stop using those credit cards and work on paying them off. Make a strict budget. Get rid of all the extras -- eating out, new clothes, cell phone, etc. Take every penny you can squeeze out of that budget and put it on the highest interest rate credit card while making minimum payments on the rest. When the highest interest rate card is paid off, move to the next till they are all paid in full.
Then only charge what you can afford to pay in full every month.
2007-12-28 08:48:19 · answer #3 · answered by bdancer222 7 · 1⤊ 0⤋
Use the $5000 to pay for classes. Just keep paying the credit cards without making any new purchases. You should easily have those paid off within 2 years or less.
For your castastrophies, like a car accident, that is why you have insurance. If you are that worried about it, lower your deductable to $100.
2007-12-28 09:25:29 · answer #4 · answered by Steve 6 · 0⤊ 0⤋
You need a serious lesson in budgeting.
Nothing else will fix the underlying problem that you created debt that you couldn't pay for. Getting another loan doesn't fix the problem, it delays it. And hint, guess which kinds of loans can't be discharged in a bankruptcy....
2007-12-28 08:47:13 · answer #5 · answered by Anonymous · 0⤊ 0⤋
im in the same situation but i dont have classes anymore...i really think you should pay off the cards because those are monthly payments then you can pay the student loans later...i think it would be more advantageous to pay off the credit cards and never ever use them again...cut them up...or dont use them and use those for the emergency you are thinking you might have
2007-12-28 09:19:11 · answer #6 · answered by Anonymous · 0⤊ 0⤋
The more you put off paying your loans, More interest is added on each month.
2007-12-28 08:46:09 · answer #7 · answered by Mark 6 · 0⤊ 0⤋
You should pay the C.Cs off first because they prolly have a higher interest rate. Having no cash is better than paying interest!
2007-12-28 08:48:48 · answer #8 · answered by Anonymous · 0⤊ 0⤋