Balancing Financial Goals: Should I Use My Savings to Pay Off Debt?
At 22 years old, I’m navigating the complexities of college life while juggling a semi-full-time job. My current monthly income is in the ballpark of $1,200, which helps since I’m not paying rent at the moment. However, I’m facing a financial dilemma: I have $3,400 in credit card debt, but I also have $3,300 set aside in savings.
My goal is to save up $10,000 by the beginning of May, which is somewhat achievable—yet the shadow of my credit card debt looms large. I’m committed to chipping away at this debt, currently repaying $100 every week. But I find myself questioning whether it would be wiser to clear my debt by using my savings, allowing me to start fresh.
This financial landscape becomes more complex as I plan to move, start paying my own rent in May, and fund a master’s degree out of pocket next year, all without external financial assistance. An additional consideration is my credit score, currently at 692, which I want to maintain—or improve—to secure approval for a new lease.
Is it a sound decision to deplete my savings to eliminate debt and then focus on rebuilding my financial cushion? Or is there a more balanced approach that can help ensure I meet all of my financial commitments while maintaining a healthy credit score? I’m open to any advice or strategies that can guide me through this challenging yet crucial phase of my financial journey.
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