Should I Pay Off Credit Cards or Save for Emergency Fund First?

D

DarkStarTech

New Member
Hi friends,

So I'm wondering... what should I do first? Pay off my credit cards or build up an emergency fund?

I have $700 in savings right now and decided to tackle the debt first. Since my last post, I've managed to bring my Walmart card down to $1k!

EDIT #2: Walmart card is now at $560!

Credit Card Balances

Credit CardBalanceInterest Rate
Walmart CC$1,48627%
Best Buy CC$2,20029%

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Incoming Paychecks (to debt or savings)

DateAmount
/7$400
2/21$600
3/7$600


Total Incoming: $1,600
 
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Normally, an emergency fund is the way to go, but in this situation, you could pay this off pretty quickly maybe in seven months. I’d pay them off first and then start an emergency fund. Worst case, you’d have an emergency, put it on the card, and end up exactly where you would have if you’d saved an emergency fund and used it. BEST case, you’d save $600 in interest.
 
Hey, I noticed those credit cards have super high APRs. You should really focus on paying those off first. Why not try giving them a call? See if they can lower your APR. Sure, retail cards usually don't budge on this, but hey, it's worth asking! Just a heads up, retail cards are known for having super high APRs.
 
Update: I’m still torn. Emergency or debt?

$700 in savings. Today, I paid the minimum for Best Buy $44, but I did $60.

Walmart? I messed up. Instead of $400, I put $486.
 
Let's do this! First, focus on making the minimum payments on both credit cards until you've built up $1,000 in savings. Once you hit that $1,000 milestone, start adding $100 to your savings each month. Then, tackle that Walmart debt as quickly as possible once it's paid off, take the money you were using for Walmart and put it toward Best Buy. You're on track to have both paid off by August, if not sooner! You've got this!
 
Here's a tip: start by setting aside a little money each paycheck even if it's just $50. Life has a way of throwing unexpected moments your way, and having a small emergency fund means you can handle them without piling on more debt. Trust me, you'll be glad you did.
 
I agree with starting an emergency fund of at least $1,000. Make the minimum payment on each credit card. With the remaining money set aside for debt, split the amount based on the total due. The Walmart CC is 40% of your total credit card debt, and the Best Buy card is 60%. After making the minimum payments, take whatever is left and make a separate principal only payment. For example, if you have $100 remaining, put $40 toward Walmart and $60 toward Best Buy.
 
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