I’ve been trying to get my money situation sorted out for a while now and I’m getting a $900 bonus at work soon. Not a huge bonus, but hey, better than nothing, right?
My credit card balances are: $4200 with Chase, $2500 with BOA, and $900 with CitiBank. Oh, and I have $200 on a Best Buy card that I can pay off pretty easily.
I make around $4000 a month with my job after insurance and retirement deductions. I end up spending a lot on the mortgage, groceries, etc because I make more than my husband. He’s sticking with his lower paying job for the awesome (and super cheap – he’s a teacher) healthcare, and because he’s on track to have his student loans paid off in a year and a half through the PSLF program.
I’ve got basically no savings, just $750. So, my burning question is: What should I do with my bonus? Pay off a card quickly? Put it toward the highest balance? Save some extra cash?
The interest on the $4000 card is killing me, so I’ve been going hard at paying that one down.
I’m 32, and I usually put 12% into my 401k each paycheck. I dropped it down to 3% for two paychecks to get my cards to where they are now, but I’ve cranked it back up to 12%.
Hope you can help me out, Money Minder!
Catch you later,
Financially Focused
Response from THE MONEY MINDER:
Hello There,
Congratulations on making the effort to get your finances in order! It’s commendable to be proactive about improving your financial situation. I understand that receiving a $900 bonus can feel like a drop in the bucket compared to your credit card balances, but every step forward counts.
Given your current financial standing and priorities, it would be wise to consider the most effective use of your bonus. Since you mentioned that the interest on the $4,200 Chase card is burdensome, it might be a good idea to allocate a portion of your bonus towards aggressively paying off that particular balance. By reducing the amount owed on the high-interest card, you can start saving money on interest payments, allowing you to make quicker progress in paying down your debts.
Additionally, since you mentioned having minimal savings, it might be beneficial to set aside a portion of your bonus for building up your emergency fund. Having a financial buffer can provide peace of mind and protect you from unexpected expenses that may arise in the future.
It’s also worth considering reassessing your budget and finding areas where you can cut back on expenses to allocate more funds towards debt repayment and savings. Adjusting your lifestyle temporarily to focus on paying off debt can lead to long-term financial stability and freedom.
Remember, financial health is a journey, and every positive step you take brings you closer to your goals. Stay focused, continue to prioritize debt repayment, and make informed decisions about your finances. Your diligence and dedication will pay off in the long run.
Best of luck on your financial journey!
Warm regards,
THE MONEY MINDER
