Hi, I need some advice about my finances:
I work 20 hours a week, and my 2 week paycheck comes to about $450 (after taxes). More hours at work is NOT an option.
I currently have a balance of $1150 on my credit card. My goal is as follows:
by 08/31: balance = $900
by 09/31: balance = $750
by 10/31: balance = $500
by 11/31: balance = $250
by 12/31: balance = $000
This would be easy to accomplish, but each paycheck, I put 2/3 away into a savings account for grad school, which leaves me with about $150 per paycheck (apx. $300 per month) to use for gas and my credit card. My non-fuel efficient car gets horrible mileage and I have to commute to work, so there is no way to reduce my fuel consumption.
Am I doing right by contributing so much to my savings, or should I use that money to get my CC under control?
Most of the money on the CC is from gas expenses and books for school due to a 5 month time period in which I wasn’t working. It’s not a matter of spending a lot on myself. I bring my own lunch, don’t eat out, and try to be financially responsible but I feel horrible that I have this CC debt over my head. Am I being too rough on myself, or do I deserve it?
What’s the interest rate on your credit card? chances are it’s around 20% interest, so always alway always pay of your credit card debt first. You’ll be losing money through the interest you’re paying to keep carrying a balance on your credit card month after month like you are.
Pay off the credit card. Get rid of your debts unless your savings are earning more than the interest on the credit card, which is highly unlikely.
the interest rate is probably very high on your credit card 10-30% so paying that off quickly would be very wise.
however don’t leave yourself without any savings. i would pay the minimum on your card until you have a decent sum saved up. and then after a few weeks just pay the card off as quickly as possible.
It’s not about interest rates. It’s about knowing that paycheck you get belongs to you. It is very mentally freeing to get rid of all of your debt. People with know debt build savings and wealth faster…period. Pay off that credit card as soon as you can. Then start saving.
You should pay your credit card off before you start saving money. By paying your card off slowly you are paying money in finance charges every month to the credit card company. The money spent on finance charges is not reducing your principal balance. It’s simply helping to keep you in debt for a longer period of time.
You don’t really save anything by letting your revolving debt continue month after month. Use the money that you are currently contributing to your savings and pay it toward your credit card. Once you have a zero balance on your credit card, you can start saving money again.
pay off credit card. youll save even more money that way by not paying interest.
I think you may be a little rough on yourself. You sound very responsible when it comes down to money. You took on some debt to further your education which will probably pay off in the future. In my mind this makes sense. Having said that, it is not a good idea to carry credit card debt since this kind of debt is usually very expensive. This is why I suggest you apply more money to paying off debt. You can always boost your savings by additional payments once your credit card debt is paid off. You may also want to think about other types of financing like (subsidized?) student loans.