Should I pay off my debt in full or take longer to pay it off while saving simultaneously?
I have credit card debt that I'm trying to pay off. I'm not sure if I should pay it off in full or save simultaneously. I estimate it will take me around 10 months to pay off the debt if I save simultaneously, but I'm not sure what's the better option.
Answers | 4
As a mortgage professional, I would ask if you have a home equity line of credit on your home. If so, I would then ask what the interest rate is that you are paying on the credit card, against the interest rate on your home eqity becasue it might just 'payoff' to pay the cc balance in full with your home equity.
I see your follow up question was not addressed. You stated that your APR is 23.99% and your original question asked if you should pay off the debt in full or save at the same time.
With an APR at 23.99% you should put ALL of your energy into paying off the debt. If you have $10,000 in debt at 23.99% interest rate this means you are generating an additional $2,399 in debt/interest each year. Said differently, this would require you to earn 24% or more on your investments each year in order to make “saving simultaneously” financially advantageous.
I think you know without me mentioning this… but it’s virtually impossible to earn 24% or more each year in order to make saving an option for you.
I hope this helps. I would be happy to answer any follow up questions you may have regarding paying off your debts.