It’s been a long time since I’ve talked debt here, other than accruing it of course. But now that my tax return is in, it’s time to do some debating.
My total credit card debt was $5429.99.
My credit accounts are with Chase (credit line of $2,000, APR 29.99%), Dell (credit line of $5500, APR 27.24%), Express (credit line of $1280, APR 24.99%), Macy’s (credit line of $1500, APR 24.50%), and Target (credit line of $1000, APR 22.90%).
I had set aside $3,000 from the tax return for summer camp and I’ve saved $900 in the mini emergency fund. And then my brain started turning, my mom started making sense, and I paid off the pretty much maxed out Chase.
Now my total credit card debt is $3425 and I have $1900 in savings. I want to keep paying down the debt but I’m hesitant. So help me work this one out.
Child support payments should start coming in regularly again but I’m not exactly sure what, if any, the regular amount will be. I also have no idea how long they will remain regular. His IRS refund was supposedly garnished and that should come in as well in the next month or so. If these things do start coming in the way they should, I would have the money from the summer camp in time that way and the $1900 in savings would not be necessary.
Paying off Macy’s and Target will leave me with $915 in savings. If all hell breaks loose with the child support again, I would have access to those cards in worst case scenarios. Although Macy’s is an unlikely candidate for worst case scenarios, you can get clothes very inexpensively if you know how to shop there and it leaves the Target and Chase card freer for expenses not clothing-related, and honestly, the debt on it is tiny– less than $50.
Paying off Macy’s, Target, and Express leaves me with about $435 in savings. Express is not as practical as Macy’s can be and Dell is clearly useless for survival. Of Target, Express, and Macy’s, Target has the largest balance and is also the most practical but it has the lowest APR, which is still too high in my opinion.
What do you think? My gut says to save everything, but my brain is yelling at me about the interest rates. So the compromise I’m leaning towards is paying off Target and Macy’s right away and then snowball payments at Dell and keep paying minimums on Express. Use any further child support payments to ramp up savings for Summer Camp ($3000) and to cover kid expenses as needed. Or do I just ice the debt repayment for now, bulk up savings, and go snowflake on what’s left?