Should I use savings to pay off card debt?

  • Money strategy: using savings to pay off your credit card debt is not a bad plan, but you should always look to have an emergency fund covering between three and six months of income stashed away (File photograph)

    Money strategy: using savings to pay off your credit card debt is not a bad plan, but you should always look to have an emergency fund covering between three and six months of income stashed away (File photograph)


Dear Dave,

I feel truly blessed. Even with everything that is going on these days, I still have a steady job and a good income. Iím thinking about taking some money out of my savings account in order to completely pay off my credit card debt. How do you feel about this idea?

Erin

Dear Erin,

Itís not a bad plan if youíve come to a point where you understand a few things. The credit card and the debt arenít the real problems. Theyíre symptoms of buying things you probably donít need with money you donít have. You need to take a long look in the mirror, because the person whoís looking back at you is the real problem.

If you can accept this, and are committed to changing yourself and your financial habits, Iíd say go for it. Just donít wipe out your savings in the process. Leave plenty of cash in there, especially right now when so many things are uncertain. Also, make sure you cut up that credit card, close the account, and make a promise to yourself that youíll never use those things again.

Once you do all this, and start living on a written, monthly budget, rebuild your savings as quickly as possible. Saving money is always a good thing. And everyone needs an emergency fund of three to six months of expenses for the unexpected stuff life throws at you.

ó Dave

Dear Dave,

Do you have a rule for calculating how much money to set aside for home repair and maintenance?

Bobby

Dear Bobby,

I donít really know of a formula to determine this sort of thing. Iíd suggest looking at your chequebook over the previous year, and see what you spent on maintenance and repair issues. Home maintenance is kind of like car maintenance, in that itís going to depend on the age and general condition of the house. If youíre driving an older model car, you expect to put more into it over time, right? Itís kind of the same principle with houses. The older the structure, the greater the likelihood youíll have to pump some money into it.

Make sure you look at things from a realistic point of view. You probably wonít need a new roof anytime soon if you had one installed in the last couple of years. But give your house a good going over, inside and out, every six months or so. This will go a long way in assessing whatís needed, and what might pop up in the future.

ó Dave

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

You must be registered or signed-in to post comment or to vote.

Published May 16, 2020 at 8:00 am (Updated May 15, 2020 at 5:35 pm)

Should I use savings to pay off card debt?

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon

  • Take Our Poll

    • "Who will the Progressive Labour Party run in the Smith's West by-election against Vic Ball after the retirement of Trevor Moniz?"
    • Vance Campbell
    • 24%
    • Ernest Peets
    • 17%
    • Anthony Richardson
    • 29%
    • Curtis Richardson
    • 15%
    • Roseanne Tucker
    • 15%
    • Total Votes: 1132
    • Poll Archive

    Today's Obituaries

    eMoo Posts