I’m 43 and my husband is 47, and we’ve unfortunately made some poor financial decisions. Each of us has a couple of credit cards: mine with a 13% interest rate and balances of $6,000 each, and his with balances of $4,000 but a high interest rate of 30%. Given our situation, should we prioritize paying off the high-interest debt first or mine? Currently, we each have around $15,000 in our Roth 401k accounts and save about $300 per month in a savings account.
3 Likes
I understand this situation can feel overwhelming. Here’s how to tackle that credit card debt quickly and strategically:
- Attack the 30% interest card FIRST! Those charges are brutal. Minimum payments on others, throw everything extra at the high-interest monster.
- Explore 0% balance transfer cards: Move that debt to a 0% interest rate card (limited time) to crush it faster. Just pay it off before the high rate kicks back in!
- Boost payments: Every dollar counts! Cut expenses to free up extra cash to throw at the debt.
- Leave retirement accounts alone: They’re for the future! Focus on debt payments with your regular income.
- Get free help: The National Foundation for Credit Counseling can give you a personalized debt payoff plan.
3 Likes
Handling credit card debt efficiently involves a combination of strategies aimed at reducing debt quickly while minimizing additional interest charges.
1 Like
$4000 at 30% interest equals $1300 annually. $6000 at 13% interest equals $780 annually. That comes to $175 a month. You will pay $175 a month instead of $300 a month. Give up saving and pay off the higher-interest credit card with that money.
Opting for the fastest solution may not always be the simplest. It’s advisable to select a method that you can sustain over the long haul. Additionally, there are resources at your disposal to aid in debt management, such as credit counseling agencies. These entities offer financial education and assist in devising a repayment strategy tailored to your circumstances.
It makes no sense to have an emergency fund if you’re in debt. You are merely squandering cash. Use the credit card as an emergency fund.
This is the glaring truth about it. You most likely have some cash on hand in case of need if you save money each month. Hold onto that, but toss everything else until the high-interest card is empty, then do the same with the other card until it is empty.
The interest rate on your husband’s credit cards (30%) is significantly higher than yours (13%). Paying off these high-interest debts first will save you more money in the long run because you’ll reduce the amount of interest accruing at a faster rate