Friday, August 22, 2008

Dilemma: What Do You Do When You *Could* Pay Off Your Debt?

In doing my weekly finances this evening, I just fully realized that if I threw all of my cash savings at my remaining debt, it would be about 90% gone. Gone. Gone.

Part of me has a huge temptation to throw my condo downpayment fund, my travel fund, my emergency fund, my (shudder to consider this) IRA fund at my remaining debt.

Though, I'm sure I've mentioned how uneasy I am when I have no cash savings on hand. I become very, very uneasy.

I'm taking on a special project next month for my primary client, and I will be in their office five days a week for the entire month. I will, thus, be earning more than I have as my estimated weekly earnings (which is a static amount for all weeks without holidays or planned time off), and be able to pay down more of my debt.

After a number of months of feeling like I was just slogging away at my debt, and not getting anywhere fast, I feel like it's all gone in to hyperdrive. I haven't been working that much more than normal. I attribute paying off the one credit card and being hyperaware of not using that credit card for anything (it's the one I keep in my wallet, and use in pinches) as part of why this is happening. I think another part is that with the one credit card at zero, all my debt money is going to only two accounts -- credit card #2, and my student loan. And I should mention that if I were to snowball my student loan, it would disappear well before the end of this year... I haven't decided on whether or not I will snowball my student loan, as I recently received a notification that the yearly interest rate went down 2% points, and is now around 5%.

But I digress.

The question remains: if you could pay off your debt, at the expense of draining your savings accounts, would you?


louise said...

I would pay off my debt if I had the money.

Ken said...

Pay it totally off.

Anonymous said...

Keep the emergency fund, fund your IRA this year if you haven't done so, put the travel and downpayment fund toward the debt. It sucks, but once the debt is paid off you'll be able to re-save those amounts quickly if you keep your discipline.