I am in my late 40's and my wife and I struggle with staying on top of our credit card debt. We have about $20,000 in credit card debt, which we pay off every year, to zero, start saving, and then ratchet up the credit card debt again. If we want to also save for our future and invest, should we be doing it concurrently with paying down our debts, so that we can get ahead, rather than stay on the credit card cycle treadmill?
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Thank you for the question. This is a good question I believe many people confront.
Establish a budget, be diligent and adhere to it.
At all costs avoid having to pay interest on your credit card and endeavour to pay it in full each month.
If you have to pay interest on your credit card, consider a balance transfer to a credit card that offers an extended interest free period (some providers are offering more than 12 months interest free on balance transfers), this may allow one to save money presently used for interest expense that could be put aside for your future. (Be diligent if you decide to transfer to a new credit card cancel the existing card).
I believe credit card debt should be paid out first before saving for your future; it would be unrealistic to think the investment rate of return would be greater than the credit card interest cost.
In general I suggest people develop good money habits, be diligent, spend less than one earns, pay down debt as quickly as possible and sacrifice / put aside a percentage of earnings each pay for the future.
Review bank and credit card statement each month and monitor where the money has been spent and establish if anything can be removed from future expenditure.
The response is general in nature; however, hopefully some value can be extracted.
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