Hi, I have an emergency fund that is enough to pay off my credit cards. I have one card ($3000) that is 5% annually by using balance transfers. I have a personal loan ($8,000) with 15% APR. If I pay off my credit cards and the loan, it will take me about 18 months to get back to the emergency fund balance that I have now. If I keep paying off my cards at my current rate, it will take about two years to have a zero balance. What should I do?

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TywinShitsGold t1_iu4bpxv wrote on October 28, 2022 at 1:33 PM

Need some dollar values thrown in that post. If your debt is $10 it’s different than $25k

ice_cream_sandwiches OP t1_iu4iyf2 wrote on October 28, 2022 at 2:25 PM

Sorry, I updated the post.

t-poke t1_iu4c9bj wrote on October 28, 2022 at 1:37 PM

High interest debt is an emergency. Pay it off ASAP.

ice_cream_sandwiches OP t1_iu4izzx wrote on October 28, 2022 at 2:26 PM

Thank you.

michigoose8168 t1_iu4hf22 wrote on October 28, 2022 at 2:15 PM

Agreed with the poster who says we need numbers but in general I would consider using the Efund to pay the 15% and keep chipping away at the 5%.

RevolutionarySand758 t1_iu4lsyu wrote on October 28, 2022 at 2:45 PM

Since you haven’t said how much exactly you have in your emergency fund, I will assume you have exactly $11,000 in there.

Don’t drain it out completely, especially if it will take you 2 years to save $11,000.

Pay off that $8,000 one. Keep $3000 in your emergency fund. Then keep chipping away at that 5% interest loan in monthly basis.

benicebitch t1_iu4cmwf wrote on October 28, 2022 at 1:40 PM

Why are you looking at paying off a 5% debt instead of a 15% debt?

ice_cream_sandwiches OP t1_iu4j2kb wrote on October 28, 2022 at 2:26 PM

I'm looking to pay off both. The personal loan is consolidated credit cards.

benicebitch t1_iu4n32b wrote on October 28, 2022 at 2:54 PM

Why would you pay 15% interest instead of 5%?

ice_cream_sandwiches OP t1_iu5brjt wrote on October 28, 2022 at 5:38 PM

For a while I didn't have enough credit available on a single card to use the balance transfer offers for the remaining amount. I will check into that again. Good call.

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ice_cream_sandwiches OP t1_iu5bm9j wrote on October 28, 2022 at 5:37 PM

You are correct about the fund amount. Thank you!

Varathien t1_iu5gjmz wrote on October 28, 2022 at 6:11 PM

Pay off the debt now. Then, if you really have an emergency, you can use your card.

ice_cream_sandwiches OP t1_iu5sbos wrote on October 28, 2022 at 7:30 PM

Thank you

eatsleepslay t1_iu8impj wrote on October 29, 2022 at 11:39 AM

Do that, and then you’ll be back right where you started. Take the advice offered by others—pay off the $8,000 credit card and keep $3,000 in case of emergencies. Work hard to pay down the last card over time.