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Pay Down Debt or Save

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luckydiva95
New Contributor

Pay Down Debt or Save

I haven't used the money I received from the stimulus packages, I just saved it. Is it wise to keep saving it or use some of it to pay down credit card debt? My goal is to be debt free from credit cards by the end of 2022 and this would give me a good head start. I work in communications so I have job security.

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Message 1 of 7
6 REPLIES 6
iced
Valued Contributor

Re: Pay Down Debt or Save


@luckydiva95 wrote:

I haven't used the money I received from the stimulus packages, I just saved it. Is it wise to keep saving it or use some of it to pay down credit card debt? My goal is to be debt free from credit cards by the end of 2022 and this would give me a good head start. I work in communications so I have job security.


If it's debt with 20%+ interest, the answer is almost always pay it down. You should keep at least a little padding for emergencies.

 

The bigger question is if you have a plan to stay out of debt once you pay it down. Without a plan to stay out of debt and build savings once you're there, what you do now is of little consequence in the long haul.

Message 2 of 7
SouthJamaica
Mega Contributor

Re: Pay Down Debt or Save


@luckydiva95 wrote:

I haven't used the money I received from the stimulus packages, I just saved it. Is it wise to keep saving it or use some of it to pay down credit card debt? My goal is to be debt free from credit cards by the end of 2022 and this would give me a good head start. I work in communications so I have job security.


There are different views on this but I think it's best to apply it to your credit card debt 

 

You'll be saving a lot more money than you could ever earn on it


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 3 of 7
disdreamin
Valued Contributor

Re: Pay Down Debt or Save

Personally I would keep a reasonable emergency fund set aside and use everything else to pay down the highest interest debt. That head-start will be very motivating and since you plan to pay off your debt within ~a year keeping up the momentum should be very possible. It's a great feeling watching those balances go down. Good luck!

Message 4 of 7
Yankee2
Regular Contributor

Re: Pay Down Debt or Save

You do need a cushion if things come up, but all I can say is debt free living (if you can) is the only way to go....

 

If I knew how this felt earlier, I would have found a way to pay things off sooner..

 

 

Message 5 of 7
Anonymous
Not applicable

Re: Pay Down Debt or Save

I really don’t like having debts so I pay them off if I am able. A fraction of my salary every cutoff is usually enough but I start panicking when I was threatened of termination.

Message 6 of 7
leo222
Contributor

Re: Pay Down Debt or Save

This is an old thread, but I'm bored, so I'll bite. My advice is to pay off a good chunk of it, wait for your credit score to improve greatly, then apply for a balance transfer, and get the rest of the debt on (near) 0% interest. You're not really losing anything if you're paying 0% interest, so you can take your time more, and save/invest the extra you get in.

Message 7 of 7
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