How should I approach my credit card debt?

Question

I just graduated and got a new job. I have a credit card debt of $5000, the min payment is about $80/mo

I really want to save for new car purchase (my current car is over 15years old).

Should I save and pay $100-$150 on my credit card.

Or devote more and try to pay off the credit card within a year.

After rent, bills, expenses, gas, food. I think I will have a little more than $1500/mo to save. Should I pay like $1000 to rid my credit card debit? How should I approach this?

Answer 1

Try to hold out on your old car as long as possible.

Whatever has the highest interest, attack that debt first. I don't understand though how you have any problem really though if you have $1500/mo to save! That's a lot of money, what are you doing with that?

Answer 2

pay off your credit card asap and wait with a new car and eliminate high interest debt.

Answer 3

Hi Jake, Take it from a guy who has been there and done that. Please, please, please pay off your credit card asap. You are paying interest like crazy and will pay even more if you go for a new car.

After you've cleared the cards, continue saving!! Pay CASH for your semi-new car. Never buy a new car and never finance it. Strange advice?

It makes total $$ sense. We all tend to want new and finance - only one side makes it big - it ain't you - and YOU are paying for it. Go read my series of articles about debt issues.

Answer 4

Look at it this way.  How much interest do you pay per month on the credit card (APR divided by 12)?  How much interest would you make putting your money in the bank (a lot less unless credit card is special teaser rate)?  So keep enough reserve cash or savings that you do not run short for gas, food, rent, and other bills.  Pay down the credit card as fast as you can, then save, and only charge what you can pay off each month.

It will look better when applying for a car loan if you are only using a small amount of your available credit.

Answer 5

Pay the important debts first. Always.

Rent fuel etc.

Then try reducing the credit card debt. Or get a bank loan to consolidate etc.

I know it ain't easy so good luck.