Which CC to Pay off?

[Virgderon]

I'm going to attack this a slightly different way- do you have an emergency fund? If not, establish one before you pay off the cards, even if it is only $1000 or so. If you don't have an emergency fund, you will be tempted to use the cards again.

Also, if you have a lot of credit card debt, I would look into a CCS- NOT a debt negotiation company, but a CCS. It won't lower your payments much, but they will get you lower interest rates and you will get the cards paid off in 5 years or less.

A lot of smart financial advisors are saying that they would never buy a house again- this housing market is volatile, nobody knows for sure if we have hit bottom yet-and buying a house may be a bad idea if you want the flexibility to move for jobs, don't want huge maintenence bills like doing a roof or buying a furnace, etc.

If you don't buy a house, of course you will want to up your retirement account or 401k savings.

Just throwing it out there that in this tricky economy, paying off your credit cards in full might not be your best option if you owe a significant amount. The credit card companies are negotiating with people now, or a legitimate CCS can help you get lower interest rates if you don't have the patience or know how to negotiate with the credit card companies directly.

 

[Nicolepa]

Paying off the mortgage is Baby Step #6 out of 7 steps. It comes well after the advice to invest 15% of your income in a Roth IRA and other pre-tax retirement funds (Baby Step #4) and starting the kids' college funds (Step #6). DR is not the only one to encourage people to pay off the mortgage early. Suze Orman also advises her followers to get it paid off before retirement.

There is a big difference in having your house paid off before retirement and paying off your house as soon as you possibly can. I can't remember 100% DR stance, but I am pretty sure he says to pay it off as soon as you can, not just before you retire.

 

[amylevan]

There is a big difference in having your house paid off before retirement and paying off your house as soon as you possibly can. I can't remember 100% DR stance, but I am pretty sure he says to pay it off as soon as you can, not just before you retire.

Exactly. I pay enough extra on my mortgage so that it will be paid off the month I turn 55. I'm not sure I'll retire that early, but the mortgage needs to go before I do, so that's a planned step. But no extra beyond that goes to my mortgage, all other extra money goes into saving and the market. At 4.5%, my mortgage is a better savings plan than my savings account, but I *hope* that I'll do better than that in the long run through other methods. (Not to mention the tax deductible interest...)

 

[Marionnette]

There is a big difference in having your house paid off before retirement and paying off your house as soon as you possibly can. I can't remember 100% DR stance, but I am pretty sure he says to pay it off as soon as you can, not just before you retire.

Understood. However my point was that DR does not say to pay off the mortgage ASAP. It's #6 on his list of 7 steps. IMO, that wouldn't be the same as ASAP.

 

[LisaTC]

I think DR and Suzy advice speaks to the masses of those who have found themselves in financially challenged situations. A lot of the hints/tips are found on many debt reduction sites & even on credit card sites. We will have our mortgage paid off prior to my DH's retirement. I started a college fund when my DD was 1 mo old...started small and have increased deposits over time. I started with my smallest debt, paid it off, took that payment and applied it to the next. It just seemed to me to be "expedient" and logical. I didn't know it was advocated by any financial guru. I do know "simply having" credit cards aren't problematic, it's the use of them causing revolving debt. What credit companies like to see is that you don't carry a balance, but you use it/pay it! Longevity accounts are optimum. Keep the one you've had the longest for emergencies. Use it for 1 thing every few months to keep your credit firm. That's the optimum credit holder. If you find yourself having a difficult time doing that, then by all means not using it until you can do that would be best. Having a CC to rent a car or do travel, etc is helpful and protected with my card. I always say never say never, you never know when you may find yourself debt free and needing to get a loan. Life happens. Plan accordingly.