Savings or pay cc

**SheriH.** · 07-14-2006, 12:30 PM

I am ready to start paying extra on my cc. But should I start paying extra on them or an emergency fund first? In all that I have read over the years, it seems like I should pay off the cc first. What would you do?

**kestrel91316** · 07-14-2006, 10:26 PM

I like Dave Ramsey's Baby Steps.

Baby Step 1: $1000 baby emergancy fund. This is to keep you from needing to use a cc if "something" happens. You need to quit using ccs. Period.

Baby Step 2: Pay off all debt (except home mortgage) using the debt snowball.

It is working for me. Just knowing that BEF is there helps me to relax. I only have two more small cc to pay off, then the personal loans and Uncle Sam.

If you don't have that BEF in place, Murphy will visit and you will be using those ccs even more.

**thrifty gal** · 07-15-2006, 12:28 PM

I agree with Gayle. But, I'll say this, if you choose to pay off the cc first, at least you are doing something good for your financial future.

**Jenna** · 07-15-2006, 04:49 PM

I would say it depends upon your situation.... family? kids? home owner? rent? c/c APR's? credit card utilization? fees associated with c/c's? type of other debt?

**BTK** · 07-15-2006, 08:09 PM

I would most definitely put the money into the EF so that you won't have to use the credit cards when the next emergency comes up.

One of the biggest mistakes people make is getting into the "pay off the credit card" mode at the expense of having something in savings. It just keeps the cycle running around.

I say put it in the EF and keep it there, and keep putting money towards your credit card balance and don't charge anything else. It will get paid off.

**Mojjo** · 07-16-2006, 10:54 AM

I would probably split it. I'm one of those who couldn't sleep if i had money in savings while paying 19% interest. But it was a big bone of contention between DH and I.

I do think though that an EF is super important and can end up saving you from having to fall back on CCs.

Good luck!!!

**Telephus44** · 07-16-2006, 11:20 AM

I agree with Mojjo. I'd probably take the extra and put 25% towards an EF, and 75% towards the CC. I guess for me also it would depend on the time frame - if putting extra towards the CC would pay it off in 2 months, I'd put it all towards the CC - if it would take 1 year, I'd split it.

Also - I strongly believe that there is no "right" or "wrong" answer. You should do whatever you feel comfortable with.

**AmyBoz** · 07-16-2006, 12:49 PM

I'd do a split as well. Kill two birds with one stone.

**tlenad** · 07-16-2006, 05:03 PM

Another one in the split it camp. I just can't imagine having a bunch of money sitting aside when I need to pay down debt and as you can see from my signature I have a lot of debt. That being said, I feel very uncomfortable without any savings.

Myself, I decided I'd a certain percent of my take home pay and the rest would go to credit cards but it really is an individual choice.

**SheriH.** · 07-16-2006, 05:36 PM

Thanks everyone. I think I will do the 25%, 75% thing. I can't justify paying interest if i have money in savings, but I do think it is important to be doing the emergency fund thing.