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?

Comments

AutoModerator t1_iu4bewo wrote on October 28, 2022 at 1:30 PM

#283,732

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

#283,800

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

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

#283,927

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

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

#284,000

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

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

#285,026

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%.

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

#285,337

Replying to TywinShitsGold (#283,800)

Sorry, I updated the post.

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

#285,347

Replying to t-poke (#283,927)

Thank you.

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

#285,363

Replying to benicebitch (#284,000)

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

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

#285,903

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_iu4n32b wrote on October 28, 2022 at 2:54 PM

#286,184

Replying to ice_cream_sandwiches (#285,363)

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

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

#291,066

You are correct about the fund amount. Thank you!

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

#291,101

Replying to benicebitch (#286,184)

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.

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

#292,034

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

#294,249

Replying to Varathien (#292,034)

Thank you

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

#310,576

Replying to Varathien (#292,034)

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.