Just checked my credit card statement ...

[trenty]

I'm curious why? Wouldn't paying off the cards which are actively charging 29-31% interest be better than putting money away for "maybe"? An emergency could always be charged to a card, and likely for similar interest rates... and if there is no emergency, then you have been paying extra interest for no reason.

The point is to not rely on credit cards.

 

[CAPSLOCK]

Understood, and that is a good rule to have. However, isn't keeping a balance on it relying on it just the same, plus more costly?

If you have an emergency fund of $1,000 but have an emergency that costs $1,600, that difference has to come from somewhere.

I guess I just don't see the benefit to having money sit in a bank while also paying high interest on a credit card.

 

[trenty]

Understood, and that is a good rule to have. However, isn't keeping a balance on it relying on it just the same, plus more costly?

If you have an emergency fund of $1,000 but have an emergency that costs $1,600, that difference has to come from somewhere.

I guess I just don't see the benefit to having money sit in a bank while also paying high interest on a credit card.

It’s the system for getting out of debt outlined in TOTAL MONEY MAKEOVER. It’s not the only way. I’m just letting the OP know what I would do if I were in his situation. In fact, I was in a much worse situation. I used the info in TMM and am now out of debt and plan to stay out of debt.

I don’t agree with everything in the book. I do use credit cards, but did not for many years after getting out of debt. I learned to handle my finances first. Then slowly built up my credit. I now pay off my cards in full - every week. I don’t wait for the statements to post.

This is just my advice. There are many different ways to go about this - but I am stating what worked for me.

 

[trenty]

And - the money will be on his cards temporarily. Build up emergency fund of $1000. Pay off credit cards (and other debt). Build up proper emergency fund. No more relying on credit cards. This should happen relatively quickly - Ramsey calls it “gazelle intensity.”

 

[firefly_ris]

Gotta start somewhere... otherwise if he pays off the cards and has nothing else left, then has a $500 car repair he is right back where he was with no liquid cash available.

What is the balance on the other 2 cards? I would start paying as much over the minimum payment as you can reasonably stand and also put away $100 each month into a HYSA to get started at least. It will start to help form a habit of saving that hopefully will grow.

Right now you don't seem to have any liquid savings set aside for anything which creates a cycle of debt. A lot of this is just working on forming new habits around money.

You have been doing several other changes so far and I am hopeful that over the next 6 months to a year you can start to see that all snowball into a larger effect.... not to mention the reduced stress of not being in constant debt. Once you have the other cards paid off, refocus on making the emergency fund larger, $1000
is kind of just to get you rolling.

 

[princesscinderella]

@tx

We don't own any checks. Haven't written a check in more than a decade. I can pay $5 and get a cashier's check. But I don't want to give them anymore money than I already have to.

Do you not have access to online bill pay through your bank account? Once you add a payee to your online banking either they have a direct deposit service set up with a bank or if they don’t the person/business you are sending the payment is mailed a physical check even if you don’t have ones yourself. What’s interesting about online bill pay is that the payment go through a clearing house and the check you receive is most likely from Wells Fargo bank even though you may use Bank of America, it keeps your account information anonymous. You can send a check to anybody as long as you have online bill pay through your bank.

Personal checks are being phased out because they pose a risk of fraud by giving your bank account number and routing number to whoever you hand a check. Anyone can take those numbers and pay a bill with an e-check online. My sister had this happen where the not too smart criminal used her account information to pay the criminal’s student loan account.

If you are concerned about your credit usage ratio now that you have closed out that predatory account, see if you can get a different card that has zero annual fees and only use it once a month for a small $10 charge and pay it off in full each month. By having the credit available but not using it will help improve that score. However if you know you will not be able to restrain yourself from running up a balance on it don’t open the card.

 

[ruadisneyfan2]

I'm curious why? Wouldn't paying off the cards which are actively charging 29-31% interest be better than putting money away for "maybe"? An emergency could always be charged to a card, and likely for similar interest rates... and if there is no emergency, then you have been paying extra interest for no reason.

When your finances are a mess and you’re borrowing money for your electric bill to help pay your rent, an “emergency” could be something simple like needing a doctor visit that has a $50 copay.
If you read Dave Ramsey’s Baby Steps to paydown debt, step 1 is to establish a mini emergency fund. He admits it’s not a full emergency fund of 6-12 months of expenses. It’s for when your car needs brakes, your microwave dies, your dog gets sick and it’s an expensive vet bill, etc.
It’s so you don’t keep leaning on a credit card to get you through every little unexpected thing that comes up in life.
I’ve been through all the baby steps and especially early on, there were plenty of times I leaned on our little EF. Each time I did, my next snowball goal was to restore it back to $1000.