I’m staring at my credit card debt of $8.5k, and I’m really tempted to just pay it off with my savings (I’ve got $8.1k). The idea of not having interest grow and skipping the $200/month payments sounds super appealing. But on the flip side, I’m unemployed since August, so if an emergency comes up, I’d have no backup cash and might have to use the credit cards again, but this time with no savings at all. We have about $3k a month coming in from my husband’s income, but there’s barely any slack after covering bills, mortgage, and all that. Anyone been in a similar situation or have advice?
I’d probably do something in the middle. Like maybe use $7k to pay down the cards and leave $1k in savings for emergencies. Then any leftover cash after bills can go toward the remaining balance each month.
@Zola
Yeah, that makes sense. I feel like keeping at least a small emergency fund is important. $1k wouldn’t be much if something major happened though… would it still be worth it?
Flynn said:
@Zola
Yeah, that makes sense. I feel like keeping at least a small emergency fund is important. $1k wouldn’t be much if something major happened though… would it still be worth it?
That’s true, $1k isn’t a lot for big emergencies, but it could help for smaller ones like car repairs or unexpected bills. If you wait until you have a job again, it might be safer to tackle the debt fully.
Flynn said:
@Zola
Yeah, that makes sense. I feel like keeping at least a small emergency fund is important. $1k wouldn’t be much if something major happened though… would it still be worth it?
I think it depends on how stable your husband’s income feels. If there’s no risk of losing that, then using most of the savings might be less risky overall.
Honestly, I’d hold onto that cash for now. You’re unemployed and emergencies happen. Even though credit card interest sucks, having no safety net sounds scarier to me.
Keegan said:
Honestly, I’d hold onto that cash for now. You’re unemployed and emergencies happen. Even though credit card interest sucks, having no safety net sounds scarier to me.
That’s the exact fear I have. I’d hate to pay it off and then need to use the cards again anyway. I’d be back at square one, but this time broke.
@Flynn
Yeah, exactly. Plus, the $200/month minimums might be annoying, but they’re manageable for now. I’d wait until you have a more steady income.
@Flynn
Couldn’t you do a balance transfer to a 0% interest card for now? You’d still owe the debt but wouldn’t be bleeding interest.
Kiran said:
@Flynn
Couldn’t you do a balance transfer to a 0% interest card for now? You’d still owe the debt but wouldn’t be bleeding interest.
I thought about that, but I’m worried I wouldn’t get approved since I don’t have income right now. Does anyone know if they still approve balance transfers for someone unemployed?
@Flynn
Good point, it might be tricky without income. But it could be worth looking into since you do have savings—it might help you qualify even without a paycheck.
@Flynn
Sometimes they consider household income, so your husband’s income might count. You could check with a bank or credit card company to see if you qualify.
If you pay it off now, you’d save on interest, but that safety net of $8.1k would be completely gone. I’d personally pay it down slowly over time, even if it takes longer.
Eli said:
If you pay it off now, you’d save on interest, but that safety net of $8.1k would be completely gone. I’d personally pay it down slowly over time, even if it takes longer.
That’s fair. I hate the idea of being stuck in debt longer, but I also hate the idea of being flat broke. I feel so stuck between these two choices.
Eli said:
If you pay it off now, you’d save on interest, but that safety net of $8.1k would be completely gone. I’d personally pay it down slowly over time, even if it takes longer.
Could you split it up? Like pay $5k now to bring the balance way down, but still keep some cash aside? It’d lower the interest while keeping you safer.
@Lake
That might actually be the middle ground I need. I’m leaning more toward leaving at least a chunk of savings just in case.
IDK, $8.5k in credit debt feels like such a burden, but I’d be too scared to wipe out all my savings while unemployed. How’s your husband feeling about it?
Reese said:
IDK, $8.5k in credit debt feels like such a burden, but I’d be too scared to wipe out all my savings while unemployed. How’s your husband feeling about it?
He’s pretty relaxed about it since his income covers the essentials, but I don’t think he loves the idea of me draining all the savings. He’s okay with me making the final call though.
@Flynn
That’s good he’s supportive, but yeah, it’s a tough choice. Maybe hold off on making any big moves until you’re employed again?
What’s the interest rate on the credit card? If it’s super high, paying it down might be worth it. But if it’s lower, I’d hang onto the cash for now.