Saturday, March 1, 2008

Save vs. Save Interest

We are receiving about $5000 for our tax refund. Now I know that it's better to not receive a refund because essentially you are letting the government borrow your money tax free. However, this is just the way it worked out for us this year.

So here's my question...would it be better to pay down credit card debt, or build up our emergency savings? We currently have over $10,000 in credit card debt (whew that's scary) and about $1500 in savings. I want to put $1000 in savings and use the rest to pay down debt, but my husband wants to put $2500 in savings and put the rest towards the credit card.

We used the credit card because we didn't have enough in savings when we needed it, and we were also living above our means. Now we have the living above our means part figured out at least.

What would you do? A vote for my way, his way, or another suggestion would be appreciated.

1 comment:

Kim said...

This is just me, but if your credit is good I would put it all on the cards. If something horrible happens then put it back on the card. You said you had your living expenses under control, figure out how to trim a hundred or two from your regular bills to bump up your emergency fund. I just hate the thought of high interest.