What would you do Save or Snowball?

[Carmell226]

I currently work a part time job that will be ending in August, I make an extra $800 a month that I will be losing. It was always meant to be a temporary job just to help my sister, who is going through chemo, out (I help her with her current job). Normally I am a SAHM.
Anyhow, we have a small savings right now but we also have about $5,000 in CC debt, do you think it is more important to continue to save with the extra money or to get the debt paid down? I am so torn about this!

Edit: I should add that our CC debt is 0% interest for another 8 or so months.

 

[lorac4disney]

For me, it's more important to pay off the CC debt. Regardless of how good your interest rate, chances are that you are paying far more to interest on the CC than you are earning in interest off of the savings.

Pay off the card. It eliminates the debt as well as the interest and fees. Once it's paid off, you won't have that monthly payment to make and can put it in savings instead.

 

[chicagoshannon]

I agree, pay off the debt first. That way you won't have to worry about how you'll pay that every month when your job ends. Once the debt is paid off you can start saving.

 

[summersalt]

I would pay it to the credit card. Get the debt off your back as soon as possible.

 

[TxRabbit]

There is more to reducing debt than merely getting it paid off. You have to own up to the reason that the debt occured in the first place. If lack of savings is a reason for your cc debt, then you need to establish a savings account as part of your reduce/eliminate debt strategy.

The fact is that, if you don't have enough savings, then you face the very real possibility of just having to use your cc again in an emergency situation (even if that emergency is something as mundane as unexpectedly needing to replace the tires on your car, etc.). Remember, being debt free is very much about savings and establishing good habits. Being debt free is not only about living within your means, its about preparedness for the unexpected. It is all a part of the equation.

A this point the savings is not about the difference between interest paid v. interest earned, the savings is about avoiding future interest paid. I would save this extra money until your description of your savings account changed from "small" to "adequate." Perhaps save some and pay some against the card.

 

[disneychrista]

Do you have at least $1,000 in emergency savings? If so then pay off that debt. Once that debt is paid off (assuming it is the only one) then you will have that extra money each month to put into savingsl.

 

[chickflick]

Do you have at least $1,000 in emergency savings? If so then pay off that debt. Once that debt is paid off (assuming it is the only one) then you will have that extra money each month to put into savingsl.

I agree with disneychrista. Most emergency will be less than $1,000, make sure you have at least that put away, then start tackling that debt!

Good luck and if you need some inspiration watch the show "Til Debt Do Us Part" on Fridays and Saturdays, Gail, the host, is very motivating when it comes to debt pay off and what could happen in 5 years if you let your debt get out of control.

 

[MomToOne]

How stable is your husband's job? If there is any chance he could be out of work soon, I'd save it. I also see you have a baby on the way - is your insurance good? Will you have large co-pays or hospital bills to pay? In those cases, I'd save it as well.