Credit Cards Are Symptoms

Kristen asks if Dave recommends taking money out of savings to pay off a credit card. Dave says yes but has a caveat.

QUESTION: Kristen on Twitter asks if Dave recommends taking money out of savings to pay off a credit card. Dave says yes but has a caveat.

ANSWER: Only if you’re going to cut up the credit card and never use it again and never borrow money again. Otherwise, you’re just treating the symptom. You see, the credit card’s not the problem. The credit card debt is not the problem. It’s the symptom of you buying things with money that you didn’t have that you probably didn’t need to impress people that you really don’t even like. You’ve got to get in the mirror and look at that person in the mirror and say, “You’re the problem. The credit card debt is the symptom.” Overspending, disorganization, not earning enough—whatever you want to blame it on, you can blame it on, but there’s a real reason that caused the credit card debt. The credit card is not the problem. It is the symptom.

If you’ve got that straightened out—you’re on a budget, you’re through borrowing money, you’re not going there ever again, you’re done and you’re done and you’re done—then I would pay off the credit card with my money in savings and cut it up. Then I would rebuild my savings very rapidly because you want an emergency fund of three to six months of expenses.

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