‘Currently my personal savings is enough to pay my credit card total down to $300’: Can draining my savings to pay off my credit card debt backfire on my move-out plan?

Hi Money Minder,

I’m looking to move out soon and I want to save as much money as possible to make the transition smooth. Right now, about half of my monthly income goes towards my car payment and a high-yield savings account for the move.

The other half goes to covering my monthly expenses, putting some money into personal savings, and trying to pay off my credit card, which has a high interest rate.

I do have enough in my personal savings to pay down my credit card to $300. Do you think this is a good move?

Farewell,
Savvy Saver

Response from THE MONEY MINDER:

Hello There,

It sounds like you’re in a challenging position, but you have a clear goal in mind to make moving out easier by freeing up more of your money. It’s great that you’re already putting aside a portion of your income for your move. With regards to your credit card debt, it’s generally wise to pay off high-interest debt as soon as possible. If you have enough personal savings to bring your credit card total down to $300, it may be a smart move to use those savings to pay off the debt completely.

By eliminating that debt, you can free up more of your monthly income to put towards your move. Make sure to address any high-interest credit card debt first before focusing on other financial obligations. Additionally, consider creating a detailed budget to allocate your expenses more effectively and reduce unnecessary spending. You could also explore options to lower your car payment or refinance it to save more money each month.

Ultimately, finding ways to reduce debt and cut unnecessary expenses will help you achieve your goal of moving out more smoothly. Remember to continue building your savings for emergencies and future expenses as well. Making these financial adjustments now may require some sacrifices, but it will put you in a stronger financial position in the long run.

Best of luck with your financial plans and your move. If you have more questions or need further guidance, feel free to reach out. Take care and stay focused on your financial goals.

Farewell from THE MONEY MINDER,