/biz/ I come to you humble, hungry and desperate. During college I had a trust fund which I not only burned through, but during the process managed to racked up 10k in credit card debt. I have paid off $3,500 in credit card debt and have budgeted myself to hopefully pay off the rest within a 16 month time frame.
I am living a very different lifestyle from when I was racking up debt as you can imagine, and am well on my way to working my way out off the hole I dug for myself. The issue is now the company I work for is very dependent upon the value of oil, and risks going under. In a situation where I have debt, but could be laid off it's difficult to tell if I should be saving, or paying off my high interest debt. Should I be devoting all of my discretionary funds to paying off debt, saving my money, or some combination of?
I have a good credit score (720ish), but my short credit history and debt to income ratio make my interest rate relatively high. Last time I looked into refinancing the interest rate was almost identical to what I already have.
combination, you should have a 6 months emergency fund just for this situation, in your case the fund will have to include the paydown on the debt
however thats not terribly much, whats the monthly bill like 220 bucks?
yeh so heres what I would do, go back to minimum payments on the card but dont increase spending (obviously) and take the difference (the amount you were snowballing into the debt to pay it off) and put that into your 6 month emergency fund (which includes the minimum payment for the card)
also with a 720 you can probably get an american express and immediately once its in your hands call and get the limit raised to 10k then transfer the balance to the amex (theyll only do balance transfers for like 75% of your limit, hence needing the limit at 10k)
theyll charge 3% (a few hundred bucks) but now for 18 months the payments you make will be towards the principle (introductory 0% apr from american express) instead of right now where you're paying...what? 70 dollars or more out of that 210 just to interest?
once you have a 6 month emergency fund you have the breathing room so this job loss wont kick your ass