Trying to buy a home next year… should I clear my debt first

Discussion
1

Hey everyone,

I’m hoping to buy a home next year, but I’ve been working on paying down my credit card debt. I started with $40k last year and have managed to get it down to $18k.

Here’s what I have left:

CC 1 - $4,800

CC 2 - $6,700

CC 3 (0% interest until June) - $6,900

I also have $11k in savings. Would it be smarter to use some of that to pay off one of the cards completely or just keep making monthly payments while saving up?

Right now, it feels like I’ll never be debt-free. Any advice?

Thanks in advance!

2

Pay off the 0% interest card before June. They offer those promos, then hit you with a crazy interest rate once it expires. Don’t let them trap you.

3

Teo said:
Pay off the 0% interest card before June. They offer those promos, then hit you with a crazy interest rate once it expires. Don’t let them trap you.

I get what you’re saying, but the 0% deal is still good for a few months. There’s no difference between paying it now or on the last day before interest kicks in.

4

Teo said:
Pay off the 0% interest card before June. They offer those promos, then hit you with a crazy interest rate once it expires. Don’t let them trap you.

Some of these cards will charge retroactive interest if you don’t pay it off completely before the promo period ends.

5

@Joss
That’s not how 0% interest cards work. Interest doesn’t get added retroactively unless it’s a ‘deferred interest’ deal, which is different.

6

You’re losing money on interest every month. Use your savings to pay off the card with the highest interest right now. Then take whatever’s left (keep at least $1k in savings) and knock out another card. After that, go all in on clearing the rest.

If you’re carrying credit card debt, you’re not in a position to buy a home yet.

7

How do you plan to buy a house next year when your net worth is still negative?

8

You should probably pay off CC 1 and 2 using most of your savings. Right now, the interest on your debt is likely way higher than whatever you’re earning from your savings account. Once those are gone, you can focus on CC 3 and pay it off before June. That way, you’ll be in a much better place financially.

9

Agreed. Keep about $1k in savings and throw the rest at your debt.

10

If you buy a house, how will you handle surprise expenses? What happens when the furnace dies in the middle of winter?

11

I know buying a home sounds great, but please think twice. I went all in and now I’m drowning in repairs. Just last week, I had to rip out carpet and drywall because of a hidden water leak from my water heater. The bill is going to hurt. Owning a home is way more expensive than people expect.

12

Your credit card interest is definitely higher than anything you’re earning in your savings account. I’d take the $11k, pay off as much debt as possible, and get rid of that monthly interest drain. If you don’t have a high-yield savings account, consider switching to one (Discover, Ally, etc.), but even then, credit card interest is brutal.

I did this myself—wiped out my savings, killed my debt, and I’ve never regretted it.