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CC Debt vs. Savings

April 29th, 2008 at 07:30 pm

Got my state tax refund yesterday. Going right into the challenge. I am getting excited about how fast this savings account is growing! I can't wait til I hit $1,000.

And I especially can't wait til I get that $600 refund check. I am trying to decide if I want to throw it all at the CC debt (it would pay off a 1/3 of one of my CCs), add it to my paltry EF, or stick it in this savings. I don't feel too bad about my EF being only $100 or so; I figure if I have an emergency, I can tap into this savings account. Once this on gets big enough, a certain amount will be moved over into my Ef and not touched for anything else, and the rest of this one will be for something special (new laptop, vacation, investing, down payment on a house, who knows?).

I love tbis feeling od saving, but I also know I need to get my butt in gear and pay off the CC debt. When I do, whatever I sent to the CCs can be put in savings each month (at least $300, if not more). And while I know that, and I know keeping a balance on my CCs means I am paying extra money for interest, I think I am scared to pay off the CCs. I know myself, and as long as I have room on the CCs I will use them. It's a bad habit I need to break. But maybe I will just save for a bit, then when I have enough pay off the CCs in one or two big payments, meanwhile continuing to pay on them what I pay now....I knwo it is throwing money away, but...

I think I am afraid of having not enough income to live again and having to rely on help. I don't want to hit that point again - ever. I think having that savings makes me feel more secure, so I am hesitant to use it to pay off the CC debt.

OK, enough introspection for now... Smile

$20 Old Balance: $607.78
State tax refund: $95.10
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$20 New Balance: $702.88

4 Responses to “CC Debt vs. Savings”

  1. creditcardfree Says:
    1209497520

    Just a question, usually brought up by Dave Ramsey, would you borrow money on your credit card with interest to have money in a savings account paying less interest? Answer should be no. It's what you are doing now effectively.

    I think you are doing great to be kicking up the savings. I know you would do just as well paying off the cc's. It's an even better feeling in my opinion!

    You can always call the cc companies and ask them to lower your credit line as you pay off the debt. Also, if you cut them up then there isn't as much temptation to use them again.

  2. ceejay74 Says:
    1209569024

    The emotional benefit of having been able to save up is probably a great thing, but ccf has a point. Why don't you stop at $750 instead of $1000, and throw everything you get after that at debt? Or after that you could get your emergency fund up to $250. Then you could say you have $1000 saved, but everything after that would go to your credit card debt.

  3. Koppur Says:
    1209571503

    You both have really going points....I'll have to put some more thought into this. Thanks! Smile

  4. Amber Says:
    1209607229

    I don't know if this helps but when I was paying off my debt last year, I saved up my EF first and then after I did that all went to my debt. Dave's snowball god luck

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