What should I do with $5K? ?

Question

I have about 5K in savings, but I also have close to 5K in debt. I have been considering investing the money (ex:mutual fund) or paying off all of my debt.

My only concern is that if I pay off my debt I may be tempted to use my credit cards again in the future, which would put me back in debt. Any suggestions would be appreciated. Thank you in advance.

Answer 1

Pay off the debt. And get rid of your credit cards.

Answer 2

Pay off your debt.  

It makes no sense to invest it/save it, unless you can find an investment that returns more than the interest rate on your debt.  Think of paying down your debt as getting guarnateed rate of return as the interest rate on your debt (i.e. if the interest rate on your debt is 5%, by paying it off, it's the same as putting in the same amount of money in an investment with a guaranteed 5% rate of return).

No offense, but it's also a dumb reason not to pay off your debt for fear it will tempt you to go back into debt (you're already in debt!).  If you're that concerned, just cut up the credit card after you pay it off; no card, no temptation.

Answer 3

-pay debt cut up credit card

-buy a house/pay off mortgage (great investment, makes you happy)

-invest/stock market (remember mutual funds not guaranteed).

-RRSP's (retirement plan) enough so that you don't get docked taxes.

-car (in the end will cost you more)

Save, save, save as much as you can or invest in something that you can get money back from like a house.

Answer 4

Pay off the debt immediately (so as not to collect late fees, interest, etc.) then slowly re earn money and invest in series I bonds and saving notes. To avoid using credit cards get a prepaid visa like a green dot and use it. Then you will have a secure investment in place and 0% debt.

Answer 5

pay off your debt if you have the money. give your credit card to your mom or a friend so you wont get tempted to buy stuff.

Answer 6

give it to me

Answer 7

It all depends if those debts are in collections. If they are in collections then you can negotiate what and how much you pay. If not then take half of your money and pay the debt and take the other half and invest it in a ING account.  

Answer 8

Pay off the debt and cancel the cards. All they are good for is getting into debt with.

Credit cards are the financial worlds cigarette.

Building you credit score is the biggest joke of the 21st century.

Answer 9

pay off your dept and cut your cards.

Answer 10

I say put your money in a stock called Fannie Mae, possinly in yahoo finance, and get rich. :)

I really recommend it, you can make like 1000 dollars in one day (but you might also lose)

GOOD LUCK!!!

Answer 11

pay off the debt.  get disciplined over the credit cards.

you have to get control over that temptation.  

Answer 12

I think the biggest question you need to answer is how much interest are you paying on your debts. If the interest on your debts is more than the percent you can make by investing it, then you definitely should be paying off the debt. After doing so, you should take some classes that teach you about finances and help you stay out of debt. There really is no reason you should feel the need to get back into debt.

Answer 13

pay off your debts and don't use them again. have some self discipline.

you are being ridiculous.

in the current market environment, it will be very difficult to earn a retun on your investment greater than the interest on your credit card.

Answer 14

invest it

Answer 15

Definitely pay off you debt!! You will feel relieved its all gone and you wont have it hanging over your head. You can stop thinking about it :)

Answer 16

I would use the money to pay off the debt. Maybe $4,500 of the debt and keep $500 for fun or a nice weekend or buy something you like. Honestly, you'll be paying way more interest on the credit card debt than you'll get with the money in the bank or invested. $5K is just not that much money, but $5,000 in debt is a lot of debt. The debt is going up and up with interest, so why wouldn't you want to take care of that first? It's not as fun as investing, but with interest rates low, after taxes on the interest, it's hardly worth investing it, unless you want to start a business or something. You would do yourself a favor to pay off or down the debt, cut your credit cards up or simply have a rule that you have to pay off your credit card every 30 days. You don't buy something, unless you have the cash in the bank to pay off the bill.

Answer 17

dont do anything with it, you have to live off of that money so buy food and pay the rent!

Answer 18

you should always pay off your debt 1st