Should we use our tax return to pay off one of our credit cards, or pay most of the balance and then put the rest in savings? By the way, we have no money saved at this point, that’s why we are in debt. Hoping to change this.
Thanks!
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My recommendation is that you set aside $1,000 in a federally-insured savings or money market account as an emergency fund. Then, apply the remainder of your refund against your credit card balances.
My other recommendation is that you pay off the credit cards with the smallest balances first, so you will have fewer accounts to tackle. This gives you a big emotional boost, and helps you stay in the debt reduction game a little longer.
As soon as you pay off your credit cards and other debt, other than a mortgage, you can beef up that emergency account.
Good luck!
I would pay off most of the credit card and save the rest of it in case of an emergency. Just be very strict with yourselves about paying off the remaining credit card balance quickly and knowing what an “emergency” is as far as the saved money is concerned.
If you don’t have any other savings, I would recommend paying a minimum amount and saving the rest. You’ll pay more in interest, of course, but you never know when you’ll need that cash for an emergency.
it is good to have a little for emergency. But credit card interest vs savings account interest??????
pay off credit cards then figure out how much you pay for c/c now and put most or all of that in savings.