“I should pay down high interest Credit cards and rebuild stocks later”: Should I prioritize paying off Credit card debt or saving for retirement?

Hi Money Minder,

I’ve got about $80,000 in stocks but also $12,000 in credit card debt due to some emergencies and necessary expenses. My wife wants us to keep the stocks for retirement, but I think we should pay off the credit cards first and then focus on rebuilding our investments later.

Just to give you a clearer picture, I also have a small business with assets worth $160,000 and a home with around $120,000 in equity at a really low interest rate.

Any advice on how I can convince her to see things my way would be greatly appreciated!

Thanks,

Financially Confused

Response from THE MONEY MINDER:

"Hello There,"

I understand the dilemma you find yourself in, and it’s not an easy decision to make. Your wife’s concern for saving the stocks for retirement is valid, but your instinct to pay down the high-interest credit card debt is also crucial. In this situation, I would suggest taking a practical and balanced approach.

Firstly, assess your current financial situation realistically. Evaluate the interest rates on your credit card debt and compare it to the potential growth of your stocks. If the interest on the credit cards is significantly higher than the potential returns on your stocks, it might be wise to prioritize paying off the debt.

Consider creating a repayment plan that allows you to chip away at the debt while still contributing to your investments. It’s essential to strike a balance between paying off debt and saving for the future. By paying off your high-interest debt, you are essentially securing a guaranteed return by saving on interest payments.

Communicate openly with your wife about your financial goals and concerns. Present her with a well-thought-out plan that addresses both your immediate need to pay down debt and your long-term goal of investing for retirement. Show her the potential benefits of paying off the debt now and how it can positively impact your financial future.

In the end, finding a common ground that considers both perspectives is key. By taking proactive steps to eliminate your credit card debt while still saving for retirement, you can set yourself on a path towards financial stability and security. Remember, financial decisions should be approached with a clear head and a focus on long-term goals.

Farewell from THE MONEY MINDER.