I've been trying to decide whether to pay off my credit cards as quickly as possible, or to take a little longer and focus on building up my savings.
The quick pay-down I calculated is kind of a snowball method...I would continue making the mimimum payments, but then whenever an "extra" paycheck falls within the month for me or DH, use that entire paycheck to pay off a card. By using this method, and also paying substantially more than the minimum on two larger balance cards, they would all be paid off by the end of this year (9 months). I would be paying about $650 a month on regular credit card payments (as much as I can budget), which would of course decrease every month as more and more are paid off.
Now if I stay at that $650 per month, and don't use any extra paychecks toward the cards, it would take a year and a half to pay them off (twice as long). But then the extra paychecks would go directly into savings (which is only $3500 right now, one month's living expenses for both of us).
The third option would be a combination of the two...pay the mimimum monthly payment on all cards, which is about $300. I could then use the remaining $350 (assuming $650 is my payment budget) to put into savings every month. (And the remaining money would of course increase every month as the cards get paid off.) I would then still use the extra paychecks toward paying cards off one at a time, and the majority would be still be paid off in 9 months, with the two biggest ones taking possibly another 6 months of extra paychecks.
Sorry if I'm not making sense, and I know the choice is very subjective...I just can't figure out if I want to pay the cards off fast, save up money fast, or do a combination of the two. BTW, I've worked out a very strict budget and the $650 is what I can get out of it for all of this. Thanks in advance! 
Starting Score: 670 EQ and 674 TU
Hi wndrwmn...
Might I make the suggestion to post the details of your cards with CL, APR, etc so we can get a clearer picture?
With what you did post, I think it is up to you...for FICO scoring, the lower util on cards the better...but for your comfort, which would be better - more in the bank or more available on the cards because you are paying them off?
You mentioned that you already do have $3,500 in savings - that's a great start! What are the chances of both of you loosing your job and not being able to find ANYTHING in a month (even mall stores, pizza delivery, etc)? If you follow Dave Ramsey (which I don't but he's not all bad), he'd say to take $2,500 out of your savings (keeping a baby EF of $1,000) and pay off those cards as quick as possible and then rebuild your savings. Personally, I don't keep a balance on my cards and I feel better at night with more in savings but his philosophy does help pay debt quickly as long as an emergency doesn't hit.
Do you have old cars? A house with things that might fail soon (ie old furnace)? A baby on the way/young children? An old pet? Health problems? The more issues that *might* arise, the higher the need for more savings...but if you are relatively good with all these...then I'd say do something like this:
$550/mo to CC + extra paychecks and $100/mo to savings...once the cards are paid off, aggressively put the whole $650 into savings until you have at least 3 months savings + deductibles and then redo your budget to make it comfortable for you...also, plan on only PIF for things (use a CC for rewards IF AND ONLY IF you know you can pay it off IN FULL with no interest - otherwise only use them for small things and pay immediately to keep the cards open).
Good luck with whatever you choose!
Thank you Peach! The only reason I didn't post all of my balances and APR's is because I've done about a million calculations myself for paying them off, and I didn't want anyone to think I was asking for them to help with that. My overall balance is about $12,000 (yeesh, I know) and my average APR is high, about 18% (even more yeesh). My overall util is about 70% (most yeesh of all).
I think that either of us could find an hourly job quickly, but it would take a while to find new FT jobs at our current salaries because neither of us have college degrees, and we've worked our way up to where we are. I believe DH is secure in his job, but I'm never sure about mine, because I work for a local government and layoffs are always dreaded every quarter. I do know that we could cut our expenses way down if I lose my job - getting rid of cable, taking the youngest out of daycare, etc. - but even then the savings might only last us a few months. If we didn't have young children I would definitely find a second temporary job right now, but between them and the need to go back to school to finish my degree, I know I don't have the energy.
Our house is only 4 years old; our cars are 6 and 8 years old. The 6-year-old is still running great; the 8-year-old has the potential to fall apart in the next year or so. We plan to run both of them into the ground, so no need for another car payment anytime soon. No health problems and no baby planned (I am really looking forward to not having any daycare payments when my youngest starts Kindergarten in 2 years). So savings is needed mostly for a job loss, and minor repairs, such as new tires or a new appliance.
Most of my balances are at least 6 months old, so I feel secure that I won't run them up again. We simply do not make enough money to use credit cards for anything but gas and bills. However, I'm worried that I won't have the self-discipline to not use the savings when things get tight (real money is easier to use for me than credit), which is why I feel the urge to use our extra money to pay off the cards now, rather then end up wasting our savings and still having balances. I'm okay if I end up with AA on a lot of my cards because I don't want to use most of them anymore. As it is I have our savings in different banks than our checking accounts, so that it's harder to access.
Thank you for your insight - I don't feel comfortable dipping into my current savings to pay down cards, but your idea of aggressively paying them down plus still putting a little in savings makes a lot of sense!
