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Pay off the Card or Save it


Forum: Financial Planning and Budgeting

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  #1  
March 18th, 2009, 06:38 PM
jentanne
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Okay, I don't really like putting my finances so out in the open, but I am going to do this because I really don't know what to do.

I have $5000 from tax return. I have paid off probably 20 bills and debts in the last year. I have one credit card left... Balance is you guessed it, $5000!!

I have $2000 in savings, I have a fund for yearly bills that will reach $2000 in the next month. In a pinch that money could be used for a big emergency and my snowball could be stopped to pay most of the yearly bills that pop up if we had to use that. So basically we have $4000 that could be used in a pinch. However, we could possibly have some legal bills this year and we will most likely have a hospital bill that will be around $800. (that is why I put an extra $1000 in the emergency fund.)

QUestion, do I pay off the credit card bill or save the money? It is not the final bill just the final CC bill. After that I will snowball my car, student loan debt, then DH's car. IF we stay on track we will be debt free in 3 years. My car will also be paid off this year if I pay off the CC bill.

Our jobs are quite secure, we both work for local gov't and are senior in positions. So we do not forsee any chance of being laid off, etc.

My only fear is that I see things in the economy getting really bad. I am seriously worried that we may need to be stockpiling food! I almost don't trust the money in the bank!

Sorry I am rambling... If I pay it all off, it will add $160 per month that could be used if it is needed. OR would be snowballed to the car. I like the idea of freeing up more money. However, I would also feel a lot safer having it in case we need it. But, like I said, I am leary of banks right now too, so continuing to keep it in the bank also freaks me out!! HELP! Please! Thanks in advance for any help, lol
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  #2  
March 20th, 2009, 07:34 AM
M!che!!e's Avatar Platinum Supermommy
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if you are that leary of banks i would pay off the credit card asap! they can raise the interest rate on you at anytime, and since the bank collapses this has become more common. you shouldn't have to foot the bill, interest wise, because other people have become delinquent on their cc payments.

if you and dh are government employees, have you looked into banking with usaa? my husband is ad army and we have everything with them. they even sent out a huge pamphlet once the bank collapses start happened to assure their customers that we wouldn't be affected the same way citigroup, wachovia and the others were because of where their investments lie. the only problem with usaa is that they only have one branch in texas so we have to bank distance wise, if we get a check we have to mail it or scan it in to them. besides that we love them.

i wouldn't worry about the money you have in the bank. most banks are fdic insured to $150k. if your bank fails the us government will pay you back your money. i would only be concerned if you had considerable investments or cd's through the bank. banks, now, want you to save with them and interest rates are at an all time high. i say take advantage of it!
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  #3  
March 20th, 2009, 04:30 PM
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I would pay it off. You have money in savings, plus if something cam up, you could also just pay the minimums for a month or 2 if you had to.
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  #4  
March 21st, 2009, 05:57 AM
jentanne
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Thanks! I think i am going to pay it off. I forgot I would still be getting the snowball money and the regular bill money to put toward it so it really won't be as bad because I will have a good amount of cash left over even using the tax refund.

I am going to wait until the end of the month just so that money can sit in my account as long as possible. The bill is not due until the 6th and I am about to get a bank dividend based on my ADB. I will let you know when i pay it off!!!!
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  #5  
April 30th, 2009, 11:21 PM
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Leave the money in savings and pay off whatever you can of the credit card. It would probably be quite helpful to your credit score if you paid it all off now though.
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