That’s Crazy Talk!
I am not used to having any money that isn’t about to be spent. At all. Any.
I keep looking at the credit card balance and then my emergency savings account balance and thinking… hey, I could grab all that money from the savings account and smack down the debt with it and be almost completely done. Maybe we could scrape up some more money from somewhere and manage to have the entire thing paid off before the end of December. Start 2008 with no credit card debt! How awesome would that be?
But that is crazy talk. It is tempting, oh so tempting, but it is not in any way a good idea.
I know this. I believe it wholeheartedly. And yet I keep thinking about it.
And if it feels this tempting now, when the balance of the emergency savings fund is smaller than the balance on the credit card, how much more tempting will it be once the balance in savings exceeds the remaining credit card balance. I think very.
I know it is insanity. I know it is a bad idea. I know in my heart it is a very bad idea, for if a real emergency happens I will need that emergency fund.
But it is tempting. But foolish. And I am done being foolish with money.
I think.
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December 5th, 2007 at 6:34 pm
I am wondering why you wouldn’t be better off paying off the credit card. Isn’t the interest you are paying costing you money? Isn’t it better to be debt free and THEN start saving. IF you have an emergency before you fund the new emergency fund then you have the credit card to use. But why would you want to pay interest if you didn’t have to??
December 5th, 2007 at 6:43 pm
Stay with it! Hold tight, dearie! You can do it!
You said it so well yourself in August:
“I never knew saving could feel so good. For the first time in a very very long time, I don’t feel like I am standing on the edge of a cliff waiting for a disaster to push me over.”
Right on.
December 5th, 2007 at 6:59 pm
It’s all in the mind. Perhaps you need to start focussing on a net worth goal to stop being tempted by mere manipulation of your existing pot.
December 5th, 2007 at 7:08 pm
The credit card is at 0% until September 2008. So actually, I’m not paying interest on it.
The emergency fund is for peace of mind more than a solid idea of making money. But that’s another story
@plonkee - my net worth is negative and depresses me, therefore I ignore it. i actually have a half-written post about that I should finish someday. heh.
December 5th, 2007 at 7:14 pm
I understand. But you’re right - as long as that credit card is interest free you are much better off keeping it in savings. I’m not sure what the deal is on your car loan - that might be worth paying off, or at least reducing the principal on, as long as the interest rate is higher than what you’re getting in savings.
I tried to do a search but couldn’t find it…
You really should be proud of yourself. You’re kicking debt’s ass.
December 5th, 2007 at 7:15 pm
Though the card is 0% until Sep 2008, you should schedule small payments towards your credit card every month. Or else, in sep 2008, you would be in shock to see the interest on the credit card. Plan to pay it off before that. I am in a very similar situation and I am planning to pay it off before the end of 0% date.
December 5th, 2007 at 7:36 pm
@Kacie - it is sweet you quoted my old post, I am touched
. I *do* know that this is a bad idea… I’m not going to do it.. I just want to. bad. lol
@BeThisWay - my car is at 4%. It is actually the lowest interest of everything. If I was going to throw the savings acct at something other than the credit card it would be my spouse’s student loan at a whopping 9%. But the savings is for an emergency and needs to stay there for that.
@unequivocal - the card will be paid off long before September 2008. I know that it is financially better to keep it in savings until like.. august and pay it off all at once but I can’t do that. I need the credit card gone. It is an emotional thing. heh. And the interest rate goes up to 13%. Heh.
December 5th, 2007 at 7:47 pm
Plonkee’s got a good idea there.
I know sometimes it’s tempting for me too, since I our savings could make a nice little hole in our debt. But I tell myself that I’ve worked out our repayment plan for a reason and I’m sticking with it for now.
December 5th, 2007 at 9:05 pm
I actually just wrote a post today about how important it is to have an emergency fund! We will have used ours twice now this month all stemming from one day. Between an incident with my car that will cost us the deductible of our insurance and an almost $200 vet bill, I’m glad we the money and didn’t resort to credit cards.
We could have paid off 2 of our cards with the emergency fund money but we knew that there was always the chance we might need it. Glad we went with our gut instinct. I think you should do the same:)
The card will get paid off before September next year right? You’re not throwing away money in interest just start slamming it as much as you can to get it GONE! Good luck!
December 5th, 2007 at 9:24 pm
Stay strong, stay strong, it will be worth it in the end! I know in our case something ALWAYS seems to happen right after we use or even think about using our meager savings (which is gone).
December 5th, 2007 at 10:03 pm
I think it’s great that you are resisting the temptation to pay off debt rather than trying not to buy a plasma tv!
I think you should stick to your plan. If you take your emerg fund and pay off the CC, then your car will break down, the plumbing will spring a leak and a long lost tax bill will appear out of thin air….
Mike
December 5th, 2007 at 11:11 pm
It never fails as soon as you spend that emergency fund, you have an emergency. I know how tempting it is to want to pay off that credit card, but you have a good thing going with the interest being 0%. Just hang in there a little longer. You’d hate to use all the emergency fund on the credit card, and then run into an emergency in which you would be forced to use the credit card again. I know, it’s happened to me.
December 6th, 2007 at 9:31 am
@Megan - I agree with Brip Blap - what awesome work you have done! And I too love your phrasing.
and everyone - thanks for the encouragement! I won’t do it, I just want to. Well, I won’t do it now. Hopefully I have a few good months and the temptation is lifted because I can do it all by myself without the EF!
December 6th, 2007 at 10:31 am
Since your credit card is 0% it’s better to keep the money in savings for now. If you have an ING account you can set up a sub-account called Credit Card and pay towards your credit card there. This way you’ll earn interest and in August (you don’t want to wait until the very end) you can take your saved money in the Credit Card account and pay off your actual credit card. You would be making 4+% off the credit card this way (I did this very thing with a 0% Amex card).
December 6th, 2007 at 10:47 am
FFB - I totally agree it is better financially, in that I’d make a little money, but it isn’t better in my head. Emotionally, there is a lot wrapped up in this credit card debt for me and I need it to just go away. The satisfaction I feel at watching those numbers continually shrink is highly worth the dollars it costs me in the short term.
Someday in the future I hope to be able to take advantage of credit cards in a profitable manner ~ for now, I just need them to stop taking advantage of me.
December 6th, 2007 at 1:41 pm
Your statement that interested me the most is the first line: “I am not used to having any money that isn’t about to be spent. At all. Any.”
That’s the best reason NOT to spend the emergency fund on paying off debt, even if you were to save a little on interest. You _need_ to become used to having money that isn’t about to spent…that’s what makes positive net worth!
Once you get used to having money sitting around “just in case” you’ll feel uncomfortable if it’s not there. We had to pay down our emergency fund a few months back, and I felt like I was locked out of my house without the keys until I got back to $1500 (and didn’t really relax until it was twice that.) Now I can get on with life knowing that if anything comes suddenly, I can handle it. It’s a great feeling.
Hang in there!
December 6th, 2007 at 5:18 pm
@Kathryn - you know, i never thought about it quite that way. in fact, my brain still revolts at the idea of having money not specifically meant to be spent. Hmm. Interesting. Much food for thought. Thanks!
@Patrick and MMJ - I know… I do… I know. I am impatient. It is a deep character flaw