[USER]

Advise: is it better to pay off a small amount of debt (5000) using all of my savings than to get a debt Consolidation loan?

I could build that savings back up in 18 months or so.

I feel like I’m making no progress on this credit card due to its interest rate.

[Stephanie]

Keep your savings. You never know when you might need it. Pay off the smaller debts first by doubling the amount you pay every month.

Once you’ve done that work on the highest interest rates ones.

Once again doubling what they’re asking for.

You’ll get there and you’ll have savings to fall back on.

[Michelle]

You need to keep 1 month emergency fund. If you have more than that in savings, you could use the rest of it to pay it off/down.

Even if you can’t pay it all off, paying down will reduce your interest charges

[Gail]

Pay it off. Save the interest cost. Use your credit card if there is an emergency! It’s the same thing

[Kayla]

I’d pay it off. Or open a card to do a 0% interest balance transfer. Transfer what you can to that card, pay the test with savings and keep the difference in your savings account for emergencies.

Example: you have $5k that needs to be paid off, say you can get a card that will balance transfer $1,000 at %, transfer the $1,000 to continue paying off and pay it off completely during the no interest terms.

Take the remaining $4k in debt and pay with your savings, then leave whatever is left in your savings there, don’t touch in case of emergency.

Re-evaluate your budget to account for the balance transfer payment and save whatever is left over

[Fran]

These are good ideas. Another idea is to get another credit card and transfer the balance for a lower interest rate.

I know this sounds crazy but quite often new credit cards have promotions for balance transfers for a lower interest rate so you can pay off the balance faster.

I know people who have done this successfully.

Good luck with your journey.

[Sherry]

Yes, pay it off then start rebuilding savings but don’t use card

[Stacey]

Don’t clear out savings if you can. Maybe use half savings and half toward the debt?

You want something set aside for emergencies bc you know it’s all going to happen the moment you have no money set aside and you’re going to have to use that credit card again.

[Anissa]

How much interest are you paying per month on your debt and how much interest are you earning on your savings?

If you’re paying out more than you’re earning, pay it off and then take the payments you’re used to making and sock that right back into your savings.

[Shelley]

I’d pay it off. There is a lot to be said for the mental side of being debt free.

[Annette]

Zero interest cards can be helpful IF you know you can pay off the balance before the promotion ends.

Be aware there is a fee.

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