I paid off my Capital One credit card.
Once I'm sure I'm in the clear and no interest is going to be charged, I'm closing off the card.
I've done this for a few reasons:
- I feel like I'm so close to the finish line of paying off debt that I can taste it. I am getting super impatient to pay off this debt.
- I hate making 2 debt payments every month and only paying off a portion of each one. Now, I only have 1 payment, with a nice snowball from the now gone payment.
- I have other resources I can tap if I run into an "emergency" in the short term. Of course, my now #1 priority is to get that EF back up to $1,000 ASAP. Then I will work on increasing it to 3-6 months of expenses.
- I'm paying more interest (14.99%) on the credit card than I'm making on my EF (1.4%).
- It brings my total debt down from $6,018.86 to $4,153.13. By the end of March, that number will start with a 3.
- That means instead of taking until the end of the year with payments at about $600 a month, it can be paid off in November or earlier with payments of about $500/mth. Obviously, I will try and pay it down faster. But this makes the payment more in line with my budget.
- I will be closing this card in order to have less debt and less available credit that should help when we're going to be getting a mortgage. These are factors in the GDS and TDS calculations that the banks do when figuring out qualification (and interest rates) for a mortgage.
Also, if an emergency does come, I only had $1K in the EF which would hold me for maybe a couple of months. With minimum debt payments of $250 it wouldn't last very long. Now my minimum would be $125 and will be getting less as I continue to pay. Also, its more than likely would have put some expenses on my credit card anyways.
So, now my Debt Repayment Sidebar has been updated and is mostly dark blue. However, my Savings are now mostly light. Once this debt is paid off, saving will be my #1 priority, its just not it right now.
How about you? Do you think I'm insane? Would you drain your savings to pay off debt?