Savings or Debt?

[kelpdiver 2]

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A note about a post above ...

Do not save $1,000 in case of emergency. Pay off credit card then use credit card in case of emergency. The idea is to have credit readily available (which you will if you pay them off) and not be paying interest (which you will if you save the money).

As I wrote, you can't pay your rent with a credit card. Maybe you could fetch a check from them, pay an incredibly high cash rate and special charge, but practically, You need cash to pay that minimum credit card payment too. So long as you pay on time, you should be able to keep the interest rates well under 10.

Ideally you want 3 months of cash, but at the very least you need a little bit of liquid currency. Otherwise you can fall prey to those usurous check cashing places or the near equilivent in MC/Visa.

[DrewEckhardt 0]

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Say you've got a nice chunk of change in savings - -

Do you pay off you Credit Card debt, and have a small balance in the bank, and enjoy the thought you have no C.C. debt -

Depends on what sort of savings you have, how hard it is to get an appropriate job in your field, how good your credit is and what your financial discipline is like.

You need to be able to suppot yourself if you loose your job. I like 6 months of living expenses; other people recommend 3; this probably depends on where you are in your career. If you're in a senior position in your field, and accepting a more available junior position could mean a five digit pay cut you might want to accomodate a longer period of unemployment.

Provided that you have a comfortable unemployment slush fund:

Good credit, good discipline: Do a 0% balance transfer for 6 months on an existing credit card and stop using that card for any other purposes (notice the fine print on the balance transfer that says balance payments go towards the low interest rate first). Setup automatic minimum payments. Put the money in a high-yield on-line savings account paying at least 5.25%. Pay it off when the low rate runs out.

Good credit, bad discipline: Do the same thing, but put the money in a 6 month CD currently paying at least 5.25% so you can't spend it.

If you can't get a better rate from an on-line bank than the credit card company is charging pay it off.

[Ron 10]

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Although it works for you, the majority of americans do not pay off their credit cards each month... which is how credit card companies have become some of the wealthiest.

I find it hard to believe you get anything for free from these companies, someone has to be paying for your 'cash back' - they aren't in business to lose money.

Works for me also...I have a card that pays me cash to use it. In six years they have paid me about 400 a year to use it and only once have I not paid it off every mth. (I had an expense report turned in late). For that mth I paid like 30 bucks. So I am WAY positive on the balance sheet.

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I find it hard to believe you get anything for free from these companies, someone has to be paying for your 'cash back' - they aren't in business to lose money.

The Credit companies earn money from the vendors I use my cards at. Ever wonder why some DZ's charge more for credit? They pay to accept Credit cards.

"No free man shall ever be debarred the use of arms." -- Thomas Jefferson, Thomas Jefferson Papers, 334