r/povertyfinance • u/k1ranell • 1d ago

Saved my first $5k at 26 pls clap 🥹 Success/Cheers

I also have some $820 in acorns and <$1500 in a rollover IRA I have yet to move to a ROTH but putting it off for tax/wuss reasons. However, I have $772 in CC debt. But a win is a win, I can pay it off with time 😁

Gonna try to save $10k next year

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u/k1ranell 1d ago

Good idea, this is also the first month I got the Capital One so I may as well pay that off before the interest hits

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u/m00ndr0pp3d 1d ago

Yeah, you have enough to cover it and it will save you interest

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u/Gaitville 1d ago

Yep credit card should always be the first debt one pays off (unless they have like utility debt that’ll get shut off or housing payments they’ll be kicked out of). Credit card interest is like the highest interest out there besides payday loans.

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u/Pyro_raptor841 1d ago

Seriously, pay that shit off.

There are many reasons to do so, your credit score (ie chances of getting a mortgage) is the least among them.

The other reason is the ~28% average interest rate, worse than literally any loan you could get except pawn shops and loan sharks.

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u/Foreign_Sky_5441 1d ago

Not just might as well, rather, absolutely should. Literally nothing dumber than frivolous CC debt (not that your cat surgery is frivolous, but you now have the means to pay for it, so you should pay for it).

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u/BeBopNoseRing 1d ago

I'd suggest using the Acorns to pay it off, leave the more liquid savings for emergencies. And then start reinvesting with Acorns if you want after the CC debt is wiped.

Also, in case you weren't aware, you can request a "hardship" account from Acorns instead of the default one. It will remove some functionality like the "Later" accounts and some other things, but the basic account remains and it costs $1/mo instead of $3.

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u/Huge_Cap_1076 1d ago

That is definitely the way to go, the savings you have accomplished shows your diligence in controlling unnecessary expenses; keep that up, payoff the credit card debt - as it truly eats up more money than you should allow it. Once doing that, as it is obvious you know how to control the many wants we normally have, simply live your life within your means, and be proactive in using the credit card only for your necessary expenses, paying the charges off before its statement cycle closes. If/when in an unexpected emergency requiring more money that cannot necessarily be paid off before interest charges, stop using the card (pay with cash) until the balance is paid off - and NEVER pay only the minimum monthly payment.

Good luck, you seem to be in a good path for your future with family; nothing wrong with Cosmetology skills, but I strongly suggest you consider an education path that will give you a job with benefits, e.g. nursing, technical skills' education, or similar that will enable you to work for a big enough company that offers benefits, to help your (and family's growth).

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u/just_posting_this_ch 1d ago

I rolled a credit card debt for a bit when I could have paid it off. Similar to what you're doing, I regret it. They're such shitbag institutions. I messed up a payment and they charged me a late fee. Then either I turn into an asshole and get my late fee back, or pay it. I did it to "build my credit" because I have heard "having credit and not using it decreases your credit score".

Good job on the quality finances!

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u/TheCygnusWall 1d ago

I have heard "having credit and not using it decreases your credit score".

This is the opposite of the truth, having low utilization increases your credit score.

See #2 under factors:
https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-affects-your-credit-scores/

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u/wetballjones 1d ago

Never ever let the interest hit. The credit card should only be viewed as a debit card where you instantly pay it off and get a little bonus reward as a result.

Don't spend money you don't have, and never let interest accrue on a credit card. Don't make any excuses for this rule and you'll be good. Keep those savings. Don't blow it on expensive gifts.

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u/Raise-Emotional 1d ago

Never carry an interest gathering balance on a credit card. Definitely USE credit cards but be disciplined like you are with the savings. Charge and pay. Charge and pay.

My wife and i have gotten into travel Hacking and free travel is our reward now for being disciplined. Let the undisciplined pay for my plane tickets with their interest.

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u/crazy1david 1d ago

Pay it off immediately and study what you're supposed to do with money. You are wasting it on purpose if you pay interest. Money in this account is earning 4% and gradually going down in value to inflation, also -4%. So it's doing nothing for you, meanwhile you also have credit cards probably around 20-30% interest absolutely working against you. The point of having 5k is to be able to pay these bills immediately every month. The credit card just gives you a month to pay.

In my opinion you put most of the money in SPY and now you're making 25% instead of giving it to a bank. What do you think the bank does with your 5k to pay you interest. They profit and feed you the crumbs.

When you need something you always buy with credit, then pay it off transferring from your investments.

So now your money is actually working for you instead of against you. You spend $100 but by the time you pay it your $100 investment is worth $105. You pay and earn another 1-5% in points.

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u/iambecomesoil 1d ago

It should be your stated goal to never pay a cent of credit card interest for the rest of your life.

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u/1800deeznutzz 1d ago

Never take hard earned cash that could make you money and pay off CC debit. Just work harder and pay off the CC debit.

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u/cryptobro42069 1d ago

Ah, I totally respect what you’re doing but you can do better than that interest rate. Do a Roth IRA if you’re doing post tax. 401k if you’re doing pre-tax and expect to make around the same for the entirety of your career.

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u/GoldenScarab 1d ago

Credit card interest is one of the best ways to stay poor. Pay it off in full every month and it's ok. If you can't afford to do that, then you can't afford a credit card.

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u/ramiro-cantu 1d ago

Think about it like this: if the apr on a credit card is 28% you paying off that credit card is always going to be better than putting the money in savings because youre getting a 28% yearly return

If you could invest your money in a 28% guaranteed return account I’m sure you’d do it in a heartbeat.

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u/ginger_and_egg 1d ago

If you have automatic payments that pay the full statement balance before the due date, you avoid any and all interest. Just don't ever spend more than you have

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u/MyOtherAvatar 1d ago

This calculator will give you an idea of what it costs to carry a balance on a credit card.

https://itools-ioutils.fcac-acfc.gc.ca/ccpc-cpcc/CCPCCalc-CPCCCalc-eng.aspx

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u/pasteisdenato 1d ago

You haven’t saved 5k if you’ve got debt. You need to get into the mindset that debt always comes first.

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u/WorkingOnAFreshName 1d ago

Do this before LITERALLY any other payments. And once you’re back to 0 debt, do everything you can to stay that way.

If you absolutely direly must go into debt again, attack that balance as soon as possible.