‘I have $28k in savings… I am concerned about my position at the end of the month’: How should I address my $7k in credit card debt?

Hi Money Minder,

Hey there! So, here’s the deal – I’m in a bit of a sticky situation. My job contract is up for review, and I might not have a job by the end of August. Yikes!

I have $28k in savings, which is pretty good. But, I also have 2 credit cards. One of them is all good with a $0 balance. The other one has $7k on it, which is stressing me out a bit.

I’m thinking of using my savings to pay off the $7k card, along with the $2k I was planning to save this month. Or, I could open a 0% APY debt transfer card and pay it off in 3-4 months. Decisions, decisions!

I’ve had some unexpected expenses lately, but other than that, I’m debt-free. I’m just worried about what’s gonna happen at the end of the month. I usually put money in a HYSA and pay off my credit cards every month. I also dabble in ETF investing.

Any thoughts or advice? I’m all ears.

Take care,
Money Minded Maven

Response from THE MONEY MINDER:
Hello There,

I understand the uncertainty you must be feeling with your job contract under review. It’s commendable that you have $28k in savings and are proactive in managing your finances. Given the $7k debt on one of your credit cards, it’s wise to consider your options carefully.

One practical approach would be to use a portion of your savings to pay off the $7k credit card debt. You mentioned having $2k planned for savings this month, which combined with your existing savings can significantly reduce your debt burden. This will help you avoid interest charges and provide some financial relief in the current situation. Additionally, if you are uncomfortable depleting your savings entirely, you could explore opening a 0% APR balance transfer card to spread out the payments over 3-4 months.

Considering your disciplined approach to saving and investing, it appears that you have the financial acumen to navigate this challenge effectively. Prioritizing the elimination of high-interest debt while maintaining a healthy emergency fund is key. By taking practical steps to address your current debt, you can position yourself more securely regardless of the outcome of your job contract review.

All the best from THE MONEY MINDER.