Me and my wife have about $5,800 in credit card debt and around $5,000 in savings. Do we just save a bit more and pay it all off at once? Or should we pay most of it now and keep a little cushion for emergencies?
Has anyone done this before? What worked for you?
If it’s high interest, get rid of it as fast as you can. That interest keeps adding up.
Maybe put $4,000 toward it and keep $1,000 as a backup.
Renny said:
If it’s high interest, get rid of it as fast as you can. That interest keeps adding up.
Maybe put $4,000 toward it and keep $1,000 as a backup.
Yeah, this is the way to do it.
I’d pay all of it except $1,000. Then build your savings back up fast. Try to have 3-6 months of expenses saved up so you’re not stuck if something comes up. And most importantly… never go back into credit card debt again 
@Zola
That last part is definitely the key here haha! Thanks for the advice!
Nico said:
@Zola
That last part is definitely the key here haha! Thanks for the advice!
Credit cards got me too… carried debt for 7 years. Finally debt-free for 2 now, and I’m never going back!
I say wipe the debt clean. Just throw everything at it, then rebuild savings after.
Credit card interest is brutal, and every month you wait, you’re giving them more money. If an emergency happens, you can use the card, and you won’t be any worse off than if you’d kept the cash instead of paying it down.
This way, you stop the interest from piling up.
I’ve been saving up so I can pay my Discover card off in full in about 8-10 months. Gonna be tight though.
Tatum said:
I’ve been saving up so I can pay my Discover card off in full in about 8-10 months. Gonna be tight though.
Why wait? You’re losing money on interest every month. Paying it down sooner saves you more.
@Adler
I was thinking I’d just make minimum payments until I had enough to pay it all at once. What’s the difference?
Tatum said:
@Adler
I was thinking I’d just make minimum payments until I had enough to pay it all at once. What’s the difference?
Big difference. Interest is charged based on your balance. The higher your balance, the more you pay in interest.
If you start paying it down now, you shrink the balance and lower how much interest they charge you each month.
Credit card interest is usually 25% or more. There’s no investment that guarantees a 25% return, so paying off debt is always a win.
Tatum said:
I’ve been saving up so I can pay my Discover card off in full in about 8-10 months. Gonna be tight though.
You’re throwing money away doing it that way.
Look at the math. If your credit card has a 30% interest rate, you’re paying about $1,500 in interest per year on a $5,000 balance. Meanwhile, if your savings earns 3% interest, you’re making about $150 a year on that $5,000.
So, is it worth losing $1,350 per year just to have that savings? Or would it make more sense to pay off the debt and stop that interest from stacking up?
@Zeke
That makes a lot of sense… appreciate you breaking it down!
Or… pick up a side hustle, put all the extra money toward the debt, and build up savings at the same time.
I did something similar… used all my savings to clear my debt and felt great. Then, within three months, everything went wrong. Car problems, family emergencies, lost my job. Had to take out a loan and max out my credit cards again.
Now I’m worse off than when I started. Talking to a financial advisor about my options.
Make sure you think it through before making a move.
Save $1,000 and use the debt snowball method. Pay off the smallest debt first, then move on to the next one. It works—I’m doing it now.
Yeah, just pay most of it now so you’re not drowning in interest, then finish the rest off over time.
Your savings will never grow faster than credit card interest. I’d keep $1,000 in case of emergencies, pay off the rest, and then focus on rebuilding savings.
Why wait? Every day you keep that debt, you’re paying interest. If both of you are working, you can build savings back up after.