Hi Money Minder,
I’ve got some savings that will let me job hunt without stress for 4-6 months. Should I use that money to pay off my credit card debt? I used to pay them off every month, but now I don’t have that luxury. If I pay them off now, I won’t have monthly fees but I’ll feel uneasy without that cash on hand. What’s the best move here? It would eat up a big chunk of my savings.
Thanks for your help!
Farewell,
Financially Lost
Response from THE MONEY MINDER:
Hello There,
While it’s commendable that you have enough savings to comfortably sustain yourself while job hunting for 4-6 months, it’s crucial to address your credit card debt situation. While it may seem tempting to hold onto those funds for emergencies, the interest and fees accrued from carrying over credit card debt can add up quickly and negate any benefits of keeping the money readily available.
Paying off your credit card debt, even if it means utilizing a portion of your savings, is the smartest financial move here. By eliminating this debt, you can free up future cash flow that would otherwise be eaten up by interest payments. It’s a proactive step that can provide you with a solid financial foundation moving forward, especially during uncertain times like a job search.
Consider creating a plan to pay off your debt incrementally while still maintaining a comfortable cushion for emergencies. You could set aside a portion of your monthly budget to chip away at the debt until it’s fully paid off. This approach allows you to strike a balance between debt repayment and maintaining financial security.
Remember, financial peace of mind often comes from being debt-free and having control over your finances. By addressing your credit card debt now, you can set yourself up for a more stable financial future. Good luck with your job search, and feel free to reach out if you need further guidance.
Farewell from THE MONEY MINDER.
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