Is paying off half of the credit card debt a possibility also? Would that free up enough money in monthly payments to help rebuild your savings and/or pay down the remaining credit card debt faster? That way, you might be ok if your car should need repair or replacement, and even if you had to finance part of the price of a new/used car, you might be better able to afford the payments.
This is a tough decision to make. I know I would be feeling like you....that paying the credit card debt off would be awfully tempting. :-D
I am not cautious by nature, so I'd be all for paying the credit cards off, BUT...you said that you're going to need a newer vehicle when your new baby arrives (or shortly thereafter). How much would paying all (or even half, as Pat suggested) of the credit cards free up for you a month? Do you have enough set aside for emergencies?
I think that you know what you want to do, but here's a good way to find out. This is something my mom always did, and you know, as dumb as it is, it really works, LOL!
So: Go get yourself a quarter (I dunno why, just because my Mom said so), assign "Pay credit cards totally off" to one side "Keep going as we have been" to the other and flip it. Best 3 out of 5 wins.
Sounds too simple, right? Here's the deal-you have to trust your instincts, because they rarely steer you wrong. If you ended up with the "Pay credit cards totally off" as the winner, but you don't feel right about it-trust that. Try it again with "pay half off" or something. If you ended up with "Pay credit cards totally off" and are jumping for joy, well, there you go. There's your answer.
Seriously, it works. Many of my dilemnas have been solved by quarters (and I don't count when I've been bouncing them into cups or flipping them against walls, lol)
I can definitely relate to where you are coming from! We have $$ in our savings that I have a hard time parting with. It has something to do with the feeling of being more secure knowing you have that there if something happens. I was going to also advise maybe paying off half of your CC debt. I think that would be a good compromise. Maybe after you pay half it off, you may feel better later putting more on it. What is your interest rate on your CC? How much do you owe? Answers to these may make a difference in what someone would recommend. Let us know what you decide, Donna
I would suggest setting aside some money, $2000 or so, for your emergency fund, then using the rest to pay off your credit card debt. I know you want to continue sending money to your savings, so when your credit card minimum goes down, start "snowballing" the difference between the old payment and the new payment, sending it to savings. This way, you'll have an emergency fund, lower credit card payments, and a way to build up your savings.
For example: Credit Card Debt: $9000 x 1% minumum = $90 payment each month $9000 in Savings.
Keep $2000 in Savings. Pay $7000 to credit card. New credit card balance: $2000 x 1% minimum = $20 payment each month Send $70 to savings account, slowly raising the amount as credit card minimum goes down.
Since you expect to have some 3 payday months (I too am paid bi-weekly, those are nice!) you could snowball that amount to your savings account as well, building it slowly back up to where it was before.
Is paying off half of the credit card debt a possibility also? Would that free up enough money in monthly payments to help rebuild your savings and/or pay down the remaining credit card debt faster? That way, you might be ok if your car should need repair or replacement, and even if you had to finance part of the price of a new/used car, you might be better able to afford the payments.
This is a tough decision to make. I know I would be feeling like you....that paying the credit card debt off would be awfully tempting. :-D
Pat :-D
I am not cautious by nature, so I'd be all for paying the credit cards off, BUT...you said that you're going to need a newer vehicle when your new baby arrives (or shortly thereafter). How much would paying all (or even half, as Pat suggested) of the credit cards free up for you a month? Do you have enough set aside for emergencies?
I think that you know what you want to do, but here's a good way to find out. This is something my mom always did, and you know, as dumb as it is, it really works, LOL!
So: Go get yourself a quarter (I dunno why, just because my Mom said so), assign "Pay credit cards totally off" to one side "Keep going as we have been" to the other and flip it. Best 3 out of 5 wins.
Sounds too simple, right? Here's the deal-you have to trust your instincts, because they rarely steer you wrong. If you ended up with the "Pay credit cards totally off" as the winner, but you don't feel right about it-trust that. Try it again with "pay half off" or something. If you ended up with "Pay credit cards totally off" and are jumping for joy, well, there you go. There's your answer.
Seriously, it works. Many of my dilemnas have been solved by quarters (and I don't count when I've been bouncing them into cups or flipping them against walls, lol)
Good Luck-
~Lisa
Donna
Hello,
I would suggest setting aside some money, $2000 or so, for your emergency fund, then using the rest to pay off your credit card debt. I know you want to continue sending money to your savings, so when your credit card minimum goes down, start "snowballing" the difference between the old payment and the new payment, sending it to savings. This way, you'll have an emergency fund, lower credit card payments, and a way to build up your savings.
For example:
Credit Card Debt: $9000 x 1% minumum = $90 payment each month
$9000 in Savings.
Keep $2000 in Savings.
Pay $7000 to credit card.
New credit card balance: $2000 x 1% minimum = $20 payment each month
Send $70 to savings account, slowly raising the amount as credit card minimum goes down.
Since you expect to have some 3 payday months (I too am paid bi-weekly, those are nice!) you could snowball that amount to your savings account as well, building it slowly back up to where it was before.
Sincerely,
Lindsey Schocke
Got Dot? Why Not? It Pays! Watch the 7 minute video!
http://website.ws/runsamok/show/
Sincerely,
Lindsey Schocke
Geeks on Tap: Mission Accomplished
Thank you everyone. Please excuse the mass post, but I have dial up and it is taking me forever to open each page today.
Pumpkin
&nbs