This is my first credit card and unfortunately, I wasn't very responsible with it, and maxed it out in less than a month. Although the debt is only $330, I'm finding it hard to make the payments and maintain savings. Any ideas how I might be able to accomplish that? Any feedback is welcome.
To avoid the additional interest you will earn on the credit card you might want to not save for a minute and use that money to pay down the card. Look at how much you earn on your savings and how much you spend on the additional charges and you will see that the card charges are way more than you are earning. Pay the card down and then start to save again.
I agree with Pat. Focus on paying down your debt - especially since it seems to be very doable. You're not in debt thousands of dollars. I think you should most definitely stop putting money towards savings and put all of your extra money into your debt. As soon as you hit a $0 balance, all that energy should then be focused on savings. It sounds like you caught yourself early, so that's a good thing. I would recommend sitting down and making a budget. If you want to use credit cards for the rewards or to build healthy credit, always pay in full - always use only what you can truly afford after all of your expenses (and this includes savings!).
I agree with both posters here. Luckily, $330 really is not that much money in terms. Most people are in debt over their head and max their credit cards out with a couple thousand of dollars. Paying off credit card debt quickly is definitely worth it if you are looking to save in the long run. Not only will your credit rise, but you will also save money by paying it off in full. My suggestion is to pay it off in full as soon as possible instead of making the minimum payments on it. That interest that you are spending is a killer and may make your debt twice as large. Good luck!
One simple step for credit card debt is, if you have a line of credit, pay off all the card debt and then work on paying off the line of credit. This is simply because credit lines always carry lower interest rates than the cards. Why carry $1,000 on a card when you have a line of credit that will cover that amount and it is only charging 7.8 percent. Cards seem to generally run interest rates of high teens to twenties in my experience. This may not help the poster who started this because they may not have a credit line to draw from. Ryder13
don't worry about saving.. pay off your credit card right away and then you can save without worries.. Don't feel bad I'm like $2500 in debt right now and I am going to school in January Lol, Im kinda fudged atm.
I agree with Giftd. Paying off the credit card comes first because if you don't, they tack on interest. And believe me, you don't want that getting out of hand. Do whatever you have to to get that paid. I understand you wanting to start saving. But trust me, deal with the debt first. You'll regret it if you don't.
Debt is like fat, easy to get and hard to get rid of. I think that clearing the card is the best bet. Because your savings account or investments won't be what you pay on credit card interest. Unless you are doing way better than anybody I know. Maybe the promised rates from Bernie Madoff? Ryder13
One thing to keep in mind when paying off ANY debt, is don't make a huge chunk of payment unless you have that extra money to apply towards the balance. I have been at fault for this. I will make a large payment to my credit card without properly doing the math. Then all my monthly bills come in or I have an unexpected expense and am wondering where my money went. Unfortunately after you make a payment, you can't get it back if you need it. Budget wisely. It's hard but worth it in the end.
You need to reduce your other expenses so that you could allocate a higher budget for your credit card payments and savings.
As others said, focus on getting rid of the debt and then you can go back to working on your savings. You'll save more in the long run by not paying that interest. And while you may not having a savings to fall back on in the meantime, you'll free up that credit card rather quickly in case there's an emergency that hits. It's much better to forgo the savings for the time being in lieu of getting rid of the debt, though.
I agree with what everyone on here has said. $330 shouldn't take you too long to pay off, then put the money you were using for the payments into savings. If you're really concerned about saving money, maybe put a few dollars away at a time. That or get a change jar. If you use cash, keep all of the coins you get back in change in a jar, along with any spare dollars you may have. It may not be as much as you'd like, but saving that way can really add up sometimes. I've known someone who took a trip out-of-state on money saved this way.
