- April 7, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Financial Hardships and Credit Card Debt
Around a year ago, I found myself in a challenging financial situation that forced me to rely heavily on credit cards for basic necessities due to a lack of savings. Unfortunately, I ended up maxing out my credit cards in order to make ends meet. While I am grateful that my financial situation has improved since then, I still find myself burdened with a significant amount of debt, totaling around 6k.
### Addressing Debt and Financial Planning
I have been diligently following the snowball method to pay down my debts, but the high monthly payments are taking a considerable toll on my income. With the looming possibility of having to pay sales tax on my car in the near future, I am feeling apprehensive about my financial stability.
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Yes absolutely. Credit card debt is insanely expensive and should be paid off by all and any means available.
Yes, you are gaining interest on the cc debt, you want to pay that asap..
Definitely pay it off. However, the problem for the future lies in using your dollars appropriately. Paying your debts SHOULD be an annoying amount of your income. Thats how you stay motivated to get rid of, and hopefully avoid it again. Obviously, unforseen emergencies are one thing, but as you use your now freed income to rebuild your 3-6 month savings, create a spending plan so you hopefully don’t creep back up to 6k on credit cards. No judgment to you, I have absolutely done it. Paid for groceries on my target credit so I could use my shitty paycheck to pay rent, and that was basically it.
Car registration, monthly subscriptions doctorS appointments… these are all things we know are coming at some point every year or few months, etc. and are not emergencies from that savings. So however you like to separate funds, plan for it. Good luck! Glad you are totally set to move forward and this is just a teency bump in the nightmare road of debt.
Yes. In an absolute actual emergency, if you haven’t built your emergency fund back up, you can always use the CC you just paid off. Obviously not ideal, but you’d be no worse off than you are now.
I personally would not carry any credit card debt if it can be avoided. The interest rates on credit cards are astronomical.
Yes, and you can recover your funds.
Stop using the cards entirely and make sure you have enough savings for an emergency.
1. Pay down the $6K
2. Redirect the credit card payment cash flow to your savings, then
3. Redirect the savings payment cash flow to investments.
I estimate you’re paying $120/m minumum, so you’ll recover your $6K in about 4 years.
You don’t have savings until you have no debt. Got to pay it off ASAP.
If it is just normal, high yield savings account savings- then yes you should do it immediately.
The only reason you would not pay off the cc debt would be if you can make a larger return on putting the extra cash you would use to pay cash in investments. Considering the interest rate on the cards is probably outrageous (which they usually are), you would definitely be much better off paying it off in cash ASAP.
Yes, payoff your debt and start a heavy savings program, maxing out retirement options as well.
If you have $6,000 in credit card debt and $6,000 in the bank, **you don’t have $6,000 in the bank.**
You have $0 in the bank and you’re paying 19.99% interest (or worse!) on $6,000 *to play pretend*.
Certainly it sucks to lose that liquidity and you should never be relying upon a credit card to serve as an emergency fund, but it’s worse to maintain a $6K balance on the card prophylactically!
You have to be careful. A lot of these comments are telling you to pay off the credit card, which I somewhat agree with. You need at least 3 months of living expenses saved before you pay off the card. If you can withdrawal half your savings and still have 3 months of living expenses, great, pay that card off. But if taking half your savings and it comes out to less than 3 months.. you could be putting yourself in this situation all over again.
Yes, also, it’s just “withdraw”. Withdrawal is a noun, it’s what you make when you withdraw something
Yes dude! Carry a $6k balance is costing you $100-150 (@ 20-30%) per month for NOTHING! Could you use an extra $100-150 per month?! I know I could! You could get that today by wiping out your credit cards. If you can do it while maintaining *some* savings it would be ideal but I would chop that down aggressively if you’re in a stable place with a decent income.
Credit card debt is an emergency. Your savings are intended to use for emergencies.
You are paying a much higher interest-rate on your credit card debt than you are receiving on that money and savings. Pay it off, and whatever you do, don’t start spending on your credit cards just “because they’re paid off now”. Otherwise you’ll end up in the exact same situation down the road.
Anybody with revolving credit card debt and paying interest who also has savings should definitely be paying off that cc debt. Not doing so makes no sense. If you have a true emergency you have your cc afterall. Losing money by continuing to do the opposite amazes me and the frequency of this same question being posed here is kinda crazy.
Pay it off.
Then, have the limit reduced to what you can pay every month. If you can afford $1000/month, have that as the limit. Then set it to auto-pay the whole amount.
Now, you won’t get back into CC debt hell.