$Savings & $Investments vs. $Credit Card Debt?

We're married couple w/ one child and no real estate. We have $30K in creditcard debt. Minimum payments of over $600 monthly (and finance charges $a few hundred monthly). Would love to reduce this debt and these monthly charges. %% not too bad (10-12%).
We have $40K in stocks, $6-8,000 in short-term savings; $17K in nest-egg.
Is it wise or unwise or mixed to use some of this savings/investment money to pay down ccard debt, even though it wouldn't erase the debt totally?

With $30k in credit card debt paying $600 per month, it will take you over 12 years to pay it off! Not only that, but you're paying over $20,000 just in interest!!!

The best thing to do is pay off all your credit card debt NOW. Then save the $600/mo payments you were paying and build up an emergency fund. Be sure to cut up all your credit cards and keep one for daily expenses. Pay it off each month and don't keep a balance. This will increase your credit score AND keep you out of even more credit card debt.

The trick is to make sure you NEVER rack up any CC debt unless you run into an emergency.

Good luck!

The only reason you shouldn't use every available resource to fully pay off credit card debt is if the investments were making a greater percentage in return than the cards are charging you.

Since I doubt the investments return 12% annually, I'd recommend you do everything in your power to pay off the credit card debt. The interest and finance charged will often double or even triple the amount owed if you continue to pay ONLY the minimum amount every month. By the time you pay it all off, you would've paid so much more.

It's a lot of debt to erase, but it would be in your best interest to get out of that debt. Your future depends on it as your credit is hurt every month that passes, which will hurt your future chances of receiving cash loans, mortgages, etc.

I guess it depends on how much your investments bring you in profits and if it is more than what you pay in finance charges on your credit cards. For example, if you are making 10% in the stock market, and your credit cards charge you 12%, it would make sense to sell some of the stock and pay off some of the debt.
If this is not the case, I would still try to make a budget that allows for higher payments on your credit card debt. If your debt is not declining, you are just wasting money.
As for the short-term savings and the nest egg, I would not touch them. Hope this helps.

Well if you look at this in a differeent way, it will be easier.
Calculate your net worth. Your assets (stocks,savings etc) increases it and liabilities (credit card,mortgage etc.) decreases it.So if you use some of your assets to pay off your debts, your net worth remains unchanged.
However the job is not yet fully done.
Do you think the interests you earn in your investments is less than the interests you pay(APR) in credit cards (usually it is).If the answer is yes ,then it is a good idea to pay off the debts first, not otherwise.However do not use your cash savings for this purpose, this is because cash reserves are for the purpose of emergencies ; your other assets may not be that liquid.
If you have some discretionary income, you can use it for that purpose as well.

Dave Ramsey would tell you to use all of your resources to pay off that debt. He'd say take all but $1000 of your cash savings and sell whatever stock you need to pay off the debt. The interest rates the credit cards charge is more than you will make off your investments.

But I'm a bit more realistic, cause there are complications to selling stock - taxes, fees, etc. If I were you I'd list my debts in order of greatest interest rate charged. I'd cut up those cards or at least not carry them with me when I shop (don't use them - you don't need them, you have cash). I'd take the $17k and pay as much of the highest interest rates as possible. Then I'd take all but about $2k of the short term savings and pay some more of that off of that debt. Then I'd get intense about paying off the rest by paying as much as possible of my paycheck to pay those things off. If you get intense about it I think you could have it done before next Christmas, if not sooner.

You guys are prime candidates for Dave Ramsey. Do yourself a favor and pick up a copy of The Total Money MAkeover at your library. It will change your life. You'll get pissed off at this debt and want it out of your life. Dave also has a syndicated radio show, tv show on Fox Business Channel , and a website.

Why dont you take your savings and eliminate the debt? I mean think about it what is your interest rate? I am thinking 15-20% because you said you want to reduce it to 10-12%. Meanwhile your investment interests I am sure does not match the money your making for the credit cards you have. Stop making the credit company rich, eliminate the debt as quickly as possible, with the extra money you will save you can gain an even bigger nest egg

leave investments as is, but stop contributing for now and pay all extra money that you can to get rid of the debt as quick as possible or pay off one of them that will free up the most extra money per month, and then go back to plan A above

I would suggest you increase your credit card payments by about $100 to $150 a month if you can. Here's why: your credit card debt has an interest rate of 10-12%, which in most cases is higher than the returns you are probably getting from your retirement accounts and savings. Am I correct? Unless your stocks, savings, and your retirement account combined produces 5-10% more than your credit card interest charges, you should pay off your credit card with your current cashflow (monthly). You don't have to dip into your savings to pay off your credit card debt if you have some extra cash that you can shave off from other non-essential expenses (like that starbucks coffee, for example).

And I suggest you read this book:

Rich Dad's Guid to Becoming Rich - without cutting up your credit cards - by Robert Kiyosaki
Cashflow Quadrant - by Robert Kiyosaki


Good luck!

Definitely pay off the debt. Cash in 30k of the stock and pay off the debt. Something happens and you lose the money in the stock and you still have the debt. Pay it off and be done with it.

Now you can take the $600 a month payments and invest. AND NO DEBT.

Check out daveramsey.com and listen to his radio show. It doesnt cost you a dime to listen. You could also find a radio station near you to listen too.

Debt free is the way to be!

well its hard to say,I beleive you need to stop investing at this point. How much in taxes and early redrawal fee would you have to pay to get your money out of your nest egg? est. 35%, so there $5950 gone already to pull it out, then you would be losing out on time growning interest. Stocks, you have to pay taxes on gains, and have 3 - 6 months worth of living expenses in your short term savings, a good money market should do. So in taking these factors in it may be worth keeping the cards, which is hard to say for me. But I wouldn't like to see your hard work erased saving for retirement to pay credit cards off, losing time to save money doesn't make any sense in some cases. I would suggest you setup an spending plan, trim the fat off your spending and the money you free up there pay off the smallest balance with the highest apr rate, then after its paid off add that money to the next card. Its not pretty but it would get the job done. ($17,000 over the next 7 years will double if in the right mutual funds, $0 will still be $0 in 7 years) not saying it will take 7 years to pay the credit cards off

I'm not a financial expert, but here is something to think about. I would pay off about 1/2 of the CC debt, then keep paying the rest off at the same amount as you were before. This way you get to keep a large portion of your existing assests and pay off the remaining debt faster.

You might even think about finding some of the low interest teaser offers and transfer some or all of the remaining debt to them. I look for ones that have low % for at least a year or more. I've used them quite successfully over the years to pay down CC debt. I keep careful tabs on when the offer expires, then transfer the debt to another CC teaser offer. I call it CC leapfrog. Of course you have to make sure you STOP future buying w/ credit, otherwise you will never break the cycle.

I even found one that keeps the % at 3.99% for the life of the loan, set up auto payments thru the bank (the key is to not EVER miss a payment), and deposited the money in the bank at 5+% and then dole it out as we do remodeling to the house. In the mean time I'm making 1+% on the money I borrowed.

If you do any of the teaser offers, CAREFULLY READ THE FINE PRINT!!! CC companies have more ways to trick you and fool you out of your money than you can imagine.

Liquidate the assets to pay off the debt.

Save 2-3 months liquid cash for an emergency fund, but other than that pay off that debt-

But importantly, you also must change your habits so you don't get in this predicamant again.

Here's a site with a free personal finance course, including a section on how to reduce and eliminate your debt:

http://www.financialfreedomtrail.com/mon...