I’m 21 and racked up credit card debt over the summer. I’m in college and work full-time, but I’ve got about $8.3k on my cards now. I’m ready to get it under control.
I don’t have an emergency fund yet. Should I build that up first, or start tackling the interest?
No worries, it’s good to face it now. How much are you bringing in each month?
Lian said:
No worries, it’s good to face it now. How much are you bringing in each month?
Around $2k before taxes.
Depends on your situation. If you still have some support from family, I’d go all in on the debt. But if you’re truly on your own, maybe set aside $1k just in case something comes up.
Have you thought about a personal loan at a lower interest rate? It’s a lot less stressful than dealing with the high interest on a credit card. Worked for me!
Two paths you could take here. First, focus on building a small emergency fund to avoid adding to your debt in a pinch. Just enough for small emergencies, maybe $500–$2,000 depending on your needs.
Or, you could split your efforts, putting some money into both debt repayment and savings. This way, you’re paying down interest without being completely without savings.
A third approach is to aggressively pay down your debt, but this risks needing to use your card again if something urgent comes up.
Small tip: if you do save, consider a high-yield account. It won’t offset the card interest by much, but it’s a little extra. Good luck, you’re on the right track by starting now.
@Orin
What’s the difference if you pay down the credit card but then have to charge it again when something happens? It’s just one big loop… you should throw everything at the card until it’s paid off and let the credit act as your emergency fund.
@Mack
Not always a good idea, especially if the credit card gets closed or credit limits drop. Cash in hand is more reliable for emergencies.
What’s there to ‘fight’? You spent the money, and now you just have to pay it back. Out of curiosity, what did you buy to get this deep in debt at 21?
Set aside $500–$1,000 for emergencies, then focus on paying down the credit card. Look into ways to cut expenses or pick up some extra work to pay it off quicker.
Try paying just a dollar over the minimum – it actually helps your credit.
Why does anyone save cash instead of just paying off the card? Basic math says you’re better off knocking down that interest first.
Mack said:
Why does anyone save cash instead of just paying off the card? Basic math says you’re better off knocking down that interest first.
Are you saying pay the card first and skip the emergency fund?
@Arielle
Exactly. Use the credit card as your backup fund until you’re debt-free.
Build a $1,000 emergency fund first, then tackle the credit card.
Lyle said:
Build a $1,000 emergency fund first, then tackle the credit card.
Good plan. And yeah, maybe look into budgeting because $8k over the summer is a lot to rack up.
Lyle said:
Build a $1,000 emergency fund first, then tackle the credit card.
Good plan. And yeah, maybe look into budgeting because $8k over the summer is a lot to rack up.
Absolutely!
Lyle said:
Build a $1,000 emergency fund first, then tackle the credit card.
Good plan. And yeah, maybe look into budgeting because $8k over the summer is a lot to rack up.
To be fair, a lot was school stuff like books and car repairs.
You might benefit from talking to a financial counselor and setting up a debt plan.
Can you share your yearly take-home after taxes, monthly expenses, and if you have any savings or assets right now?