I have 2000 dollars in credit card debt. Should I wipe out my savings to pay it off or should I pay what I can and keep saving?

Keep $1000 in savings for emergency fund. This way if something comes up you will have the money there and not have to charge on the credit card you are paying down.
Take the rest and any other amount you can pay a month and pay off your card.
This is a Dave Ramsey thing.
Check out his book: Total Money Makeover, it is wonderful and lots of great ideas to get out of debt and stay out of debt!

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Jenifer M

I strongly recommend developing a savings mentality. Keep adding to your savings and NEVER, EVER use it to pay off a debt.

Of course, if an emergency crops up, it is better to use your emergency fund to deal with the problem than use the credit card. That's the purpose of that money. Sometimes we are in a situation where we have to use a credit card for an emergency (someone died and we have to fly to the funeral, for instance) then as soon as possible use the emergency fund to pay off that debt.

However, if your credit card debt is just the normal expenses - clothes you found on sale, a night out at a restaurant, a fun weekend get away - suffer with paying it off out of your normal cash flow.

If you get into the mentality that you can use your savings to wipe out your credit card debt, then you'll start justifying a bunch of little charges on your card. As in, "Oh it is okay to charge these movie tickets, I'll just take the money out of savings when the bill comes." If you start down that road, you'll end up with NO savings and lots of credit card debt.

Hang onto your savings. Become debt-adverse. Pay off that debt and rejoice in the freedom that not having that monthly bill brings.

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"Poor people work for their money. Rich people make their money work for them."

I would go with taking 1/2 of the savings and putting it toward the debt and saving the rest.

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~Happiness is a large family~

i would personally leave the savings alone. and just start putting everything i could on the cc card.

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Measure wealth not by the things you have, but by the things you have for which you would not take money.

Unless your savings account is earning more than your current interest rate for your credit card, I would take at least $1500 out of the savings and apply it to the card. You can always build up the savings again. I would pay the card off as aggressively as possible (assuming it is not one of those really low 0% interest type offers, etc.).

Yes, you could have an emergency come up. The odds are that the remaining $500 would cover it. If not, you could turn to the card again for that one emergency. This way you have a relatively small chance of running up the card (for a true emergency). The other way you are guaranteed to be paying lots of interest on a card when you have the money sitting in the bank earning way less interest (again, I'm assuming this isn't one of those really low interest cards).

Really depends on the interest rate. So if you have a 0% intro interest rate I would figure out what you need to pay to pay off by the time it goes up. I like to have money in savings I had a few months where we didn't and it was scary to have to rely on the credit going through.

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Kimberly Proud Mommy to Bethany Rose April 2006

If you save your money a 2% interest and carry a credit card balance of 15% interest you are losing money, even while you save. If having a small amount in savings make you feel comfortable I would save between $500-$1000. Then put a huge chunck into the credit card and work diligently to pay that sucker off.

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ITA. I've always read and heard to pay off debt b/f saving money, because you'll never earn nearly as much interest w/ saving as you're paying in interest on the debt.

I would pay it off.