What should I do with the money in my savings account?
I am single, 50 years old, and I have a pension and 401(k). I have $10,600 in credit card debt (one credit card's balance is at $4,300 with no interest and another balance of $6,300 with 15 percent interest) and two personal loans totaling $27,000 (one loan's balance is at $7,000 with 11 percent interest and the other is $20,000 with 11 percent interest).
I recently sold my car for $18,000 and placed the money in a savings account. What should I do with this money?
Joshua Escalante Troesh was voted the #1 advisor nationally by the Investopedia Advisor Insights audience.*
Generally speaking, putting the money toward paying off the credit card debt is going to help you the most, starting with the highest interest rate card. There are traps, however, with the 0% card. It would help to build a complete financial plan considering your entire financial picture including savings, debt, income, expenses, and retirement plans.
Assuming you are well-positioned with your financial plan, I would recommend starting by investigating the 0% card a bit further. If you don't pay it off in full before the 0% offer period expires, you will almost certainly be charged back interest from the first day you got the credit card. There are many tactics in the contract which can cause you to pay the back interest. As a former VP of Marketing at a credit union, I can tell you banks do everything they can to make sure you don't actually get the 0% rate. This article explains the dangers of 0% credit card offers.
Once you have squared away the promotional card, then focus on the 15% credit card. You should also work to adjust your budget to free up money to pay down the rest of the credit cards. You should have a goal of trying to eliminate the credit card debt within the next five years while also contributing to your retirement. This will make it so your final decade before retirement can be focused bolstering and preparing for your retirement.