paying off 5-6k in CC debt?

[Imp]

This is VERY bad advice. Do not use up your savings. If you become unemployed you will need available cash much more than an empty credit card balance.

That's assuming he loses his job right after paying it all off, which is worst case scenario. It also assumes that he gets no unemployment, has other emergencies, can't/won't move home to parents, etc.

You are right that leaving yourself completely void of savings is risky though. Better approach would be to pay a big chunk (at least 50%), then aggresivley pay the rest off. Or find a lower interest rate balance transfer or line of credit. Like others said, need more information from OP to make better decision though - what other debts are owed, family situation, job stability, etc.

But the way I approach it is that he doesn't lose his job immediately (key word) after paying everything off. If he pages 5-6k off in CC debt at let's say 10% interest per year, which is lower than the standard 19-ish%, he will get rid of an ongoing ~$50/month charge compounded each month.

If he gets rid of that $5k, essentially receives about an extra $50/month. He can build that nest egg or emergency fund back up quickly with some discipline. Otherwise, he loses his job and has to pay everything else ontop of an thing that siphons $50/month from his already limited income. And that's being generous because if he hasn't negotiated, his CC interest is probably north of 15%.

 

[jupiter57]

i have about 5-6k in credit card debt and am getting tired of making minimum payments on several cards. whats the best way of paying this off? i have the cash to pay it off but would rather not use it for this. last time i got a personal loan from my bank and paid it all off. is there a better way of doing this? i know personal loans dont offer the best interest rate. a coworker of mine recommend doing a balance transfer but im not too sure.

Who are you and what are you doing actually admitting to having CC debt on this forum??? :biggrin:

You are supposed to "brag" about never carrying a balance, use your points to buy new cars every year, etc., (even if you still have $250K in Student Loans and are still a student)!

But seriously, if it were me, I guess I would pay off the CC's to avoid the interest, but keep the cards as an "Emergency Fund".
If you can save $5K-$6K, you can do it again. Take the interest you are paying and add that to your savings. Simple as that.

 

[edro]

Literally every person in debt "has the money the pay it off" but doesn't want to.
WTF kind of logic is that...

Talk about first world problems.

If you want to keep the cash as an emergency fund, payoff the debt with it and use the credit card as the emergency fund.
Emergencies rarely happen. You are paying interest now.
You don't have to pay interest on credit cards with 0% balance while you are waiting on an emergency.

 

[the DRIZZLE]

That's assuming he loses his job right after paying it all off, which is worst case scenario. It also assumes that he gets no unemployment, has other emergencies, can't/won't move home to parents, etc.

You are right that leaving yourself completely void of savings is risky though. Better approach would be to pay a big chunk (at least 50%), then aggresivley pay the rest off. Or find a lower interest rate balance transfer or line of credit. Like others said, need more information from OP to make better decision though - what other debts are owed, family situation, job stability, etc.

But the way I approach it is that he doesn't lose his job immediately (key word) after paying everything off. If he pages 5-6k off in CC debt at let's say 10% interest per year, which is lower than the standard 19-ish%, he will get rid of an ongoing ~$50/month charge compounded each month.

If he gets rid of that $5k, essentially receives about an extra $50/month. He can build that nest egg or emergency fund back up quickly with some discipline. Otherwise, he loses his job and has to pay everything else ontop of an thing that siphons $50/month from his already limited income. And that's being generous because if he hasn't negotiated, his CC interest is probably north of 15%.

It makes no to arbitrarily say he should pay half without knowing his financial situation.

 

[JoeyP]

Figure out how you got to $6k in CC debt, and STOP DOING THAT.

Start budgeting and use cash or debit. For extra discipline, have a portion of your pay auto-deposited into separate physical accounts: emergency fund for the unexpected, car fund for cash toward your next car purchase, a trip fund for upcoming vacations, etc.

 

[waggy]

Living with a hole in your roof and not using an available credit card to fix it because you do not have the cash is not a noble sacrifice, especially if you had the opportunity to save money for an emergency such as this and did not (hence the need for credit).

Risk-reward is not as black and white or as simple as your make it. Ramsey's ideas for eliminating debt sound good on the radio because they are hard line and emotional but then practicality sets in, something he rarely speaks about.

Should people pay off debt? Absolutely. Should people avoid unsecured credit? Absolutely. Should people pay cash for what they need and live within their means? Absolutely.

Should people stop paying their mortgage because they lost their job and the last year they have been paying down debt and only have a grand or so in the bank?

You can answer that one.

wait he really says to get rid off all cash? wtf?


We have a cash Reserve, don't use credit (house and car are exeption. even on the car its paid off in 2 years tops). we do have CC's and other lines of credit for those major "oh shit moments"

IF we had a hole in the roof damn right i would use a CC to fix it. then pay it off ASAP.

I have seen to many people get fucked up with CC debt then keep rolling it over. sure you can live nicely doing it for a while but you are going to hit a ceiling that won't let you.

I don't understand paying 12-39% interest on thousands every month. im to cheap to do that. i like my money.

 

[aaksheytalwar]

Stop spending more than you can chew. I routinely get monthly cc bills of $2k+ pm but I pay for them way before the deadline, often upfront infact. Just last month I paid much more than my regular bill. Just pay it and don't spend as much in the future.

 

[Strk]

Stop spending more than you can chew. I routinely get monthly cc bills of $2k+ pm but I pay for them way before the deadline, often upfront infact. Just last month I paid much more than my regular bill. Just pay it and don't spend as much in the future.

I go one further and have auto–pay in full turned on. I hate to carry cash.

 

[JoeyP]

IF we had a hole in the roof damn right i would use a CC to fix it. then pay it off ASAP.

Another way to do that is to have a big pile of cash on hand. Funny how someone with $20k in cash is perceived as "rich" when many have typical income; it takes discipline to set aside 500 /mo for years to get there.

 

[Naeeldar]

The way people shoving their advice out in this thread is just insane. If you read the threat start to finish what you see is a bunch of people giving advice (with the intent to help so not knocking people for that) based off their own experiences/living expenses.

One person through out 15-20k cash reserve - which is my own personal preference but then I also have somewhere around $2750 a month in mandatory bills. Other parts of country some people pay half what I do in a mortgage. It's all relative.

Anyway to the OP you need to post more details - what are your total monthly bills? how much cash inflow you have each month and most importantly how much do you have in savings?

That info is important because it's ture you may need to pay it off but then again you may not. I had an ex I dated for 4 years. When we first met I learned she had $11,000 on a cc paying 15% interest and meanwhile she has $20k in the bank, cleared $85k a year and her monthly bills only came to $1700. I showed her how much money she threw away each year in interest and she promptly paid it off. Given her financial situation though it made sense.


Cliffs - need more info.

 

[randomrogue]

The way people shoving their advice out in this thread is just insane. If you read the threat start to finish what you see is a bunch of people giving advice (with the intent to help so not knocking people for that) based off their own experiences/living expenses.

One person through out 15-20k cash reserve - which is my own personal preference but then I also have somewhere around $2750 a month in mandatory bills. Other parts of country some people pay half what I do in a mortgage. It's all relative.

Anyway to the OP you need to post more details - what are your total monthly bills? how much cash inflow you have each month and most importantly how much do you have in savings?

That info is important because it's ture you may need to pay it off but then again you may not. I had an ex I dated for 4 years. When we first met I learned she had $11,000 on a cc paying 15% interest and meanwhile she has $20k in the bank, cleared $85k a year and her monthly bills only came to $1700. I showed her how much money she threw away each year in interest and she promptly paid it off. Given her financial situation though it made sense.


Cliffs - need more info.

What possible situation would warrant not paying it off? He has the money. I'm a bit unclear on why anyone would hold a balance on their CC unless they simply couldn't afford to pay it off.

Emergency fund is great and he should rebuild that asap but in the interim he can count on his zero balance CC rather than pay high interest rates.

 

[bigrash]

Don't use the cash to pay off your debt. Use it to buy a nice shiny car instead.

 

[Jeff7]

OP hasn't been online since posting this thread yesterday.
The credit card company must have come to repossess him. :'(

RIP.




Edit: Wait...he is among us.

Last Activity: Today 06:49 PM
Current Activity: Viewing Thread paying off 5-6k in CC debt?
:ninja:

 

[Regs]

pay it off only when you have a couple thousand extra to cover emergencies. Cash is king, and people who advocate paying off all CC debt with no consideration for keeping some cash in surplus are morons who don't know how the real world works!

This only makes sense if that debt is helping you make more money, which it clearly isnt.

 

[JM Aggie08]

Keep an eye out for 0% intro APR/0 balance transfer fee deals. Lately, Chase Slate has been offering this. The introductory rate goes for 13 months, would should be plenty of time to pay that down.

Whatever you do, do not drain your savings. If something unexpected comes up and you have no liquid, but your debt is paid off, you'll just put yourself back in the same position as you were in before.

 

[jagec]

Don't use the cash to pay off your debt. Use it to buy a nice shiny car instead.

At last, some good old-fashioned AMERICAN advice. I was beginning to think that ATOT had been taken over by aliens.

 

[JM Aggie08]

At last, some good old-fashioned AMERICAN advice. I was beginning to think that ATOT had been taken over by aliens.

What he should do is put 85% of his income into his 401k and drive a 98 civic.

Forget living while you're young, do it while you're senile and your body is giving out on you

/thickest veil of sarcasm

 

[alkemyst]

I'd just stroke a check for that at the end of the month and be done with it.

 

[Imp]

It makes no to arbitrarily say he should pay half without knowing his financial situation.

He's got enough in savings to pay off $5-6k, so that means he has got at least $5-6k. If he has savings and has acknowledged that he is capable of paying $5-6k off, then he likely has an income > expenses. If that's the case, he can probably afford to pay $3k off using savings, leaving him $3k (i.e. he doesn't need to dip into savings regularly to pay off bills).

[Edit: I'm also making some not too "out there" assumptions from a bunch of facts: dude has few posts, goes by name "young grasshopper", types with limited grammar, has relatively low debt at $6k combined with relatively low savings (assuming he's got $6k-ish), goes on a tech forum to ask for advice on money, and has limited finance skills.

Chances are, this guy is young, doesn't have a house/mortgage, has only rent, student loans, and maybe a car. The car is disposable, and being young, parents are likely around to help or allow him to crash, friends may let him crash, and car can be lived out of if desperate - car is disposable, unless he loses his job and "needs" the car for the new job, and can't move closer to job. Student loans would be ongoing if he has any at all. With these assumptions, dude could probably afford to risk having only $3k rather than $6k in savings. And then he has to lose his job immediately after paying it off.

Yep, you're right, we do need more information to make any decision. But OP didn't give any, this is internet-quality advice, and everyone is over analyzing the question...]

I can see having cash being better than credit in an emergency if you're paying off a loan like a car, mortgage, or rent. Otherwise, most purchases can be covered using some form of credit, which he would open up by paying a chunk off. Speaking of, maybe OP should sign up for a line of credit to cover other emergencies that credit cards won't cover.

Honestly, we could use more information, but it feels like everyone is making the OP's question way more complicated than it is. Sounded like OP just wanted to know what other ways he could pay off his credit in place of savings, not whether his financial situation warrants it.

 

[Jumpem]

That's a little crazy high IMHO...particularly for someone who is younger. As an absolute minimum you need a month of cash reserves, but ultimately you can convert credit to cash pretty easily, and the hit that you'll take if you get a cash advance is less than paying off the interest on a $6k balance.

Crazy high, would be $75k+ in my mind. $15k-20k would pay my expenses for 4-5 months.

 

[AyashiKaibutsu]

Who are you and what are you doing actually admitting to having CC debt on this forum??? :biggrin:

You are supposed to "brag" about never carrying a balance, use your points to buy new cars every year, etc., (even if you still have $250K in Student Loans and are still a student)!

But seriously, if it were me, I guess I would pay off the CC's to avoid the interest, but keep the cards as an "Emergency Fund".
If you can save $5K-$6K, you can do it again. Take the interest you are paying and add that to your savings. Simple as that.

Judging by the information given, he could have if he wanted to. I've paid about 50$ interest that was a conscious decision and made 500ish hundred dollars in cashback over the past two years. It baffles me that you're so hung up on this.

 

[Young Grasshopper]

thanks for all the information. i guess adding in that i had about 45k in savings would have been helpful. i just paid it all off. i hope to get back to 45k by next year with my taxes/bonus.

 

[kaerflog]

I call BS.
You are either trolling or incredibly stupid.
If you have $45K in savings, why have you been making minimal payments on several cards ??
QUOTE "i have about 5-6k in credit card debt and am getting tired of making minimum payments on several cards"

 

[rommelrommel]

OP just went full retard.

 

[JackBurton]

I call BS.
You are either trolling or incredibly stupid.
If you have $45K in savings, why have you been making minimal payments on several cards ??
QUOTE "i have about 5-6k in credit card debt and am getting tired of making minimum payments on several cards"

Yeah, no doubt. That's pretty retarded.