Debt or Savings!
Date: Thu, 06/17/2010 - 18:02
Well we have nothing in savings..maybe $300.. which is really not much. My wife puts $10 a week into there but I just found out that whatever she puts in there during the month she takes out and puts towards that credit card debt. So we've managed to get it from a maxed out $1500 down to $940 as of last statement.
I want to get the debt gone, but I want something into savings.. in case of an emergency.. auto repair.. something that's going to go wrong. She says if that's the case we can just use the credit card. SHe wants to put everything toward the debt, then start building savings.
I say we should pay off the debt AND put money into savings. My feeling is that if something happens then we are tacking on MORE debt that we just paid off!!!!!!! Then we'll have more debt and NO savings!!!
HELP!!! I do think I am right.. it makes sense to me.. but she thinks the chances of ""something happening"" are slim to none and I think he's wrong.. I don't want debt, and I never want to use the stupid credit card again!
I would put money into savings first. After you have an emergen
I would put money into savings first. After you have an emergency fund then pay off the debt. Since the debt is so small, you should consider having a yard sale or get a 2nd job for a month or two and just get it paid off.
for more information on what to do, pick up a Dave Ramsey book at the library or listen to his radio show. It's fantastic stuff and will help you out tremendously.
I would pay the min and try to get $500-$1000 in an emergency fu
I would pay the min and try to get $500-$1000 in an emergency fund ASAP. Then start paying extra on the cc. That way if something happens you don't have to go back to the cc. Like Debt Free to be said, I would do what you can to earn some extra cash to expedite the process, with that small of debt you can get it handled in no time, good luck!
You are both right. You are arguing philosophy. There are a fe
You are both right. You are arguing philosophy. There are a few ways to look at this and no absolute right answer.
What is the rate on the credit card? Let's say it is 15%. The rate on the savings is probably 1% or less. Every dollar you put toward debt saves you 15%. Every dollar you put in savings earns you 1%. Which makes more sense?
Your concern is what happens when the car needs a new tire? You'd rather have a stash of cash and use that to pay the bill. That's fine and you are not at all wrong in thinking that way. Just realize that doing that delays the debt repayment and results in more interest paid over time. He's willing to take the chance that an expense won't pop up before the debt is repaid in order to speed up the repayment. If something does pop up, you'll charge it and that will slow down the repayment.
Either method slows down the repayment. Your way definitely slows it down whether that unexpected expense happens or not. His way only slows it down if the expense comes along before the debt is totally repaid.
Personally, I'd sleep better knowing I had some cash on hand, so I'd take your side, but his side, in the end, will work out just as well and might actually save you money over time because you'd shorten the debt repayment and pay less interest in the process.
The main thing is that once that CC is paid off, you both agree to never, ever use it again to make any purchases that you can't afford to pay in full when the bill comes each month.