Credit Card Debt and Emergency Funds Saugerties NY

The Debt Adviser by Steve Bucci • Bankrate.com

Dear Debt Adviser,
I have a significant amount of credit card debt that I have accumulated through the years -- about $18,000, actually. My credit is fine. I pay more than the minimum payment and on the small balances I pay it in full each month. I know one of the reasons why the balances haven't decreased is because I continue to spend money on things I "need." I have $13,000 in my savings. I've been trying to start my emergency fund while paying down my debt. My question is: Should I use my savings to pay off most of my debt? Thank you.
-- Rachel

Dear Rachel,
Ah, yes, those things we "need." They'll get us every time if we're not careful. Using your savings now to pay off your debt is not something I would recommend. You are clearly spending more than you are earning, and I am concerned that if you bled your savings to pay your debts, you'd be so impressed with your new low balance that you would spend back up to the $18,000 limit or beyond. I am also worried that you think things are fine, and yet you have a credit card debt level that would choke a horse!

Let me tell you about two of the people who came to see me during my credit counseling days. One had a $500 balance for the first time and thought the world was going to end. Another had 23 credit cards and, until the last one maxed out, didn't think he had a problem.

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