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URL:  http://boards.fool.com/greetings-figirl-of-course-my-bias-is-to-pay-off-23593785.aspx

Subject:  Re: Should I pay off a cc with my ING fund? Date:  1/22/2006  9:50 PM
Author:  xraymd Number:  219062 of 308881

Greetings, FIgirl, of course my bias is to pay off MBNA before they charge you a cent of interest because I happen to be allergic to paying finance charges. And to owe $500 in finance charges if they were not paid off before the deadline - well, that money comes right out of your pocket. In fact, if you were able to fund your Roth, you'd really need to come up with $3500 because of the $500 you'd have SAVED by not allowing the balance to spill over into interest accrual. Plus, if you had not thought about this, I am not sure that your interest saved would be only $500 if you paid it off - your savings in fact might be even HIGHER (that is, you might end up owing even MORE than $500 if you don't pay it off) because of the reachback effect of having them go all the way to the beginning of the cycle before you made any payments to charge you interest on the highest balance you had with them, just because they can.

So think carefully about the true dangers of leaving that money unpaid in full by the deadline!

You say your snowball in February to MBNA is $2450. What happens then to that $2450 in future months? Where is it designated to go? Can it go towards building your ING back up and building up what you will need for your Roth, then topping off your credit card repayment snowball with it (as you may have planned to do) after April, say? I see no harm in having a low water mark in your savings accounts if the balances have been reduced to pay off a bill you will no longer owe ANYTHING on and when the income coming in will be divertable towards paying against ALL goals you have (both savings and debt repayment), ALL of which serve to increase your net worth. Already you have a total of $4900 between March and April from your snowball alone that you WOULDN'T be owing any more to MBNA, so you'd be well on your way to funding your Roth (and this is your only opportunity for 2005) and replenishing your ING account.

Just food for thought. But remember that I hate owing interest and forbid myself to do so, especially if I still have a sufficient income stream to be sure that I can replenish the coffers over time.

xraymd
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