You’re definitely not alone. I’d personally set up an emergency fund first. If an emergency hit and I had zero saved up, I’d rather deal with a debt collector than face being homeless. Try to save $1,000 at least. Is your debt in collections or still on active cards?
Put 75% of what you can towards the debt and 25% in a savings account.
Maybe look into a personal loan. Pay off the credit card and use any extra from the loan as a backup fund. It worked for me when I was in college. Just make sure you don’t use the credit card again until the loan is cleared.
What are you fighting exactly? You owe the money because you spent it. The trick is to pay it down and avoid adding more. Try living a bit leaner until you’re back on track.
Put any extra money towards the debt first. Emergency funds are nice, but paying off debt should be your focus unless you have something specific you’re saving for.
Blakeley said:
Put any extra money towards the debt first. Emergency funds are nice, but paying off debt should be your focus unless you have something specific you’re saving for.
I don’t agree. People with no emergency fund end up in more debt when something unexpected comes up. I work in collections, so I see this all the time.
@Emerson
Why would you save money at a lower interest rate than your debt? Just pay it off.
Mack said:
@Emerson
Why would you save money at a lower interest rate than your debt? Just pay it off.
I work with people in debt every day. Those with no emergency fund always struggle the most when something unexpected happens.
@Emerson
A lot of folks are just short on income. Sure, saving is good, but paying debt first is often better, especially with high interest rates.
Mack said:
@Emerson
Why would you save money at a lower interest rate than your debt? Just pay it off.
High-yield accounts actually offer around 5% interest now, not just 2%.
Mack said:
@Emerson
Why would you save money at a lower interest rate than your debt? Just pay it off.
High-yield accounts actually offer around 5% interest now, not just 2%.
5% or not, it’s nowhere near the 30% interest on a credit card.
@Emerson
Just curious, why did you choose to work in collections? Not trying to judge, but always wondered.
Pax said:
@Emerson
Just curious, why did you choose to work in collections? Not trying to judge, but always wondered.
It’s not about saving money, but it’s safer to have a small emergency fund, even if it costs more in the long run.
@Emerson
Fair point, but for someone in OP’s position, focusing on paying the debt may still be better.
Pax said:
@Emerson
Fair point, but for someone in OP’s position, focusing on paying the debt may still be better.
I think it’s more about having a safety net. What’s your background in finance?
@Emerson
I’m in healthcare, so no financial background. Sorry if my comment came off wrong.
Pax said:
@Emerson
I’m in healthcare, so no financial background. Sorry if my comment came off wrong.
I get it. Just sharing what I see daily with people in debt.
8.3k isn’t that bad. Just make your payments and chip away at it.
Hart said:
8.3k isn’t that bad. Just make your payments and chip away at it.
For a college student, that’s actually a big amount! Minimum payments only rack up interest. It’s best to avoid using your credit card for non-essentials.
Where are you working full-time and making under $2k a month?