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Savings or Credit Card?

January 3rd, 2014 at 05:10 pm

This week I have spent more than I should.

My best friend came home and we went out, twice.

Yesterday I took a couple ladies to visit another friend that lives a couple hours away to see her new apartment. At the last minute they asked me to drive because I had a smaller car (to save on gas). It cost over $25 in gas to get there. They did not offer to help pay, and I did not bring it up. So of course it saved them on gas! lol. I hate to be nit picky about small stuff like that, but all I can think about is the $25 that wont be going to my EF this week.

Now comes my dilemma. I need to put $75 a week into my EF.

I have about $150 on my credit card right now. Not due until middle of Feb. I will be adding probably $50 more this week to it for normal expenses such as gas.

I like to pay off my credit card every week or at least down as low as I can, just to stay on top of it. I dont want a huge bill due at the end of the month.

After bills this week I will have around $160 left.

Should I put $75 in my EF, and just pay down $85 on the credit card?

Should I put $50 in my EF, and pay down $110 on my credit card?

Should I pay off my credit card asap and put only $10 in EF?

Option 2 sounds better because I hate having a balance on my credit card. But if I want to keep up with my saving goals, every time I cut back the amount I deposit, I will have to catch it up another week and that is hard!

So I think savings should come first.

What do you do? How do you chose between savings, and delaying debt payment for a little while longer? Do you pay your credit card in full every paycheck and just put your extra in savings? Or does saving come first?

8 Responses to “Savings or Credit Card?”

  1. ceejay74 Says:

    First of all, I'm sorry those ladies stiffed you. Very bad form in my opinion, especially if they asked you. Maybe it's because I don't have a car and get rides more frequently, but whenever it's more than say a 15-minute drive, I try to offer something for gas.

    I would always pay off the credit cards first, but then, I had a huge amount of credit card debt at one point and would feel sick if I didn't pay my balances in full. I actually pay them twice a month, every payday, because it makes me nervous to carry a balance for a full month! Either way you'll need to come up with the extra money if you want to achieve both your savings and your debt-repayment goals, so I'd go with the option that feels best psychologically. Whatever doesn't feel like you're getting derailed.

  2. snafu Says:

    I suggest looking at the interest rate tacked on to any balance left on a CC. I may be wrong but as I understand it, it's important to pay your CC at least two days before it's Due Date to build a high number credit score. When you pay before it's billed, it's not considered 'credit' and doesn't move your score higher. One more thing to consider.

    In my opinion, creating an EF is very important but avoiding fees or interest is even more important. You've done an excellent job of money management and I can't see the downside of privately tracking CC balance and mentally subtracting sums so that the funds are there to pay in full. Sorry your friends 'stiffed' you on the cost of gas. Lesson learned so that when asked to drive a major distance in future, you can cheerfully suggest riders split the cost of a tank of gas Before you agree to drive.

    BTW, do you use Gas Buddy site or research which stations give discounts on specific days? We check and top off gas every Tuesday because a nearby station gives an unadvertised discount on Tuesdays. I also use a CC that gives cash back at a higher rate on gas and groceries. it doesn't seem like much each week but it's significant over the entire year.

  3. creditcardfree Says:

    Are you paying interest on your debt? I would pay it off and add the remainder to savings. If your balance is creating a problem in saving as much as you want, then you are probably spending too much OR you don't actually have that money to save. Something to look at a little closer.

    We have an EF and we save automatically for retirement, college and annual expenses. We pay any cc debt in full each payday (twice per month). When there is extra cash we decide between saving and paying down money on the mortgage.

  4. beawealthywarrior Says:

    pay off the credit card

  5. klarose Says:

    Wait! I want to clear something up.

    I have NEVER paid credit card interest.

    I always pay in full every month.

    This is not a matter of saving and allowing a credit card balance to carry.

    I stated that it is not due until Feb. It will be paid off before them.

    I am talking about each paycheck. Do you pay your credit card down every paycheck, or do you let me build and pay it off at the end of the month, all at once before it is due?

  6. starfishy Says:

    if it was me, i would go with option #2. that way you satisfy both of your desires rather than black and white, all or nothing. if i'm reading your post correctly, you are going to pay the remainder of the credit card soon. option #2 let's you see some progress on your savings, which to me is exciting and builds incentive. good luck with whatever choice you make. you seem to be young, smart and on track with your finances, which is fantastic!! Smile

  7. ceejay74 Says:

    Hi klarose, my answer doesn't change. I just don't like making partial payments to CCs, even when it's before the due date. Smile

  8. creditcardfree Says:

    We pay ours at least twice per month as I said...on payday. Sorry, I mentioned interest, it wasn't really clear to me. I'd pay the most you can to your credit card each pay period and then the rest to savings. Once it is paid off, then you will just have more for savings.

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