MJ
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I may be rehashing some answers here but debt is an emotional issue. If you are earning more on your $40k investment that you are paying on your credit cards, then "mathematically" you are ahead, but I bet it's eating at you pschologically. Therefore you asked Yahoo answers. Odds are that you are paying far more in interest on your credit card debt rather than on your investments. Your income is your best shovel to dig yourself out of debt. Make sure that you have enough funds for an emergency fund (either $1000 or 3- 6 months income, depending on what makes you feel comfortable); then apply the remaining savings IMMEDIATELY toward your debt. Then, start with lowest credit card balance and pay it off as quickly as possible. I guaranty it will make you feel better. (Now mathematically, you should pay off the highest interest rate first, but emotionally, we don't work that way...we are human. We need to see progress) Paying off your smallest balance, then start applying your payments to the next smallest balance with a "vengeance" will start making you feel better. Take a look at Financial Peace by Dave Ramsey |
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tyler durdenâ„¢
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how much interest do you earn with savings?
how much interest do you pay on the credit-card?
any other questions. |
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tigertate2003
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This is very interesting. I am 10K in debt and a little bit more than 10K saved. I asked a nationally known financial adviser, and she said "yes" pay it all. I did not take the advice. 2 years later, after trying to get out of debt the slow way. I did not work, so I hired a financial adviser who told me not to pay it all at once. Her philosophy is that you need a financial cushion in case of an emergency with the house, car, family etc. With the cash you can rely on yourself if you don't have the credit rating to get a loan for such emergency. Instead she advised to 1. quit charging, 2. consolidate the debt as much as possible. 3. pay as much as you can on the debt monthly, and watch it go down. She advised not to use your cash and that It will not be quick, but it will work. With both suggestions, remember the choice is yours. You may want to consult a financial adviser for yourself to ask that question.
Of course it depends on where the money is...ie investments, or a money market account. I am sure this is all easier, if the money is in a cash account that is more readily accessible than an investment account. If you liquidate an investment you will have to pay taxes and interest on the account. |
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Personal Angel
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You should pay off the debt in full if you have the money. It would make you feel a lot better in the long run. Although, I can't fathom how you managed to get so very in debt- and also have such a huge amount of savings. |
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rabbit
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Pay off the debt. You will save a fortune in interest. The money you would have paid monthly to pay off the debt can be saved and after some time you will have saved a small fortune |
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rwbblb46
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Absolutely! your savings is probably earning interest at 1/3 the rate you pay on a credit card. Pay it off and never get into credit card debt again.
Pay it all off! |
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lisabee
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How can you be in so much debt, yet have so much money saved up?
Anyway, pay it all off and start saving again. They will only start to charge you interest and you will end up paying more than you need to. |
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koalatcomics
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absolutely....the credit card interest is more than the savings interest so your ahead...but change your habits soyou dont fall back in a hole |
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homosapien
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Pay off your full credit card debt ...as the saying goes better late than never....the sooner you pay off the better and stress free life u have. |
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Durian
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Put the money where the highest interest rate of return is. Unless your situation is very unusual, this means paying off the high-interest credit card debt. (If the rate on the savings account is higher than this, please tell me how I can my savings there too.)
If the credit card interest is, say, 18%, paying it off is like investing in something that will earn you an 18% return. The rate you pay on your debt is typically far higher than the rate you earn on your savings, so it makes sense to pay that off first.
Here's another way to look at it. Let's say you you had no debt but you could borrow money at 18% and you could earn 5% on your savings. If someone suggested that you borrow money at 18% so you could invest it at 5%, you'd rightly think that was crazy. By NOT paying off your debt, you are effectively borrowing the money for one more month, a month at a time, at the high credit card interest rate, all so you can keep it in the savings account for one more month at the low interest rate.
Note that the basis for this conclusion has nothing to do with judging you for how you got so deep in debt or making you feel better to be out of debt. It's just math and logic to help you get the best return on your money. |
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crimethinker1984
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If you don't have a likely reason to need the savings for emergencies, pay off the cards NOW. You'll save thousands in interest. |
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momoftrl
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lump sum. |
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AWF DEEZ
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Never put all your eggs in one basket. Try reorganizing your debt first. Pay off anything with high interest rates. If you have good credit try to get some cards with a 0% introductory rate. That was the debt doesnt cost you anything. You can pay over the year with no interest on your debt, but collect interest while your money sits in a high yield sacvings account. |
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Mariposa
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If the interest you are paying on the credit cards is higher than the interest you are getting from the savings account, yes. |
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supercreditguru
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If your savings are earning you more interest than your debt is costing you, you are winning financially.
If not, pay off your debt. |
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David A
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pay off the debt to help u out with ur credit score. im only saying this because u have the money so i think it would be the smart thing to do especially in this country ur credit score is everything. |
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Traveler
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pay off the debt. then cut up your cards except for one. Pay that one off in full every month. If you don't have the cash to pay for something you should not be buying. however. if you pay off your card every month you get to use their money for 30 days at no interest. Your credit scores go up by paying everything off and not paying the interest will save you $$$ USE YOUR CREDIT CARD. DON'T LET THE CARD AND THE CREDIT COMPANY USE YOU!! |
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jwddna@sbcglobal.net
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I don't recommend it. You will end up with no savings, and wil no doubt use the credit again. Pay them down to a manageable amount (maybe half of the 40k) going from highest to lowest interest and balance. For example if you have a 10k card at 19% and a 1k card at 7%, pay all of the 10k and half of the 1k. You want to keep balances and keep a good pay history for future credit needs. Don't blow your savings. |
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vands01
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Yes and cut up you cards....... |
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Anne-Arky
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Oh my goodness yes.
You might want to save $5K of the savings for an emergency fund, though. Use $35,000 now to pay off the bulk of the debt and when you have the next $5K pay off the rest.
But before you do that, CUT UP THE CREDIT CARD before you add on any debt to this mountain. |
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JCisMe
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pay it off... someone on here said you shouldn't because you need to save some for a "cushion" in case something happens... helllooooooo this is what the credit card is for. THAT'S your cushion. but in the meantime, u're not paying interest on it...
and as for that same person's american express "advisor"... wow... why would you take advice from someone who makes money by you keeping money charged on your cards... talk to someone who DOESN'T have a vested interest, then u'll get a more fair & honest answer.
oh ya... btw... pay off your cards.. that's the right thing to do. |
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punk ***** piece of ****
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all debts can be removed from your 'report' in 2,3, or 5 years.
debt's are routinely sold and they sell as low as .02 on the dollar after a point. Bill collectors are full of it! Don't let credit-card company's rip you off any more than you want to be
THEY CAN'T EAT YOU |
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