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Author: FIgirl Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308484  
Subject: Should I pay off a cc with my ING fund? Date: 1/22/2006 8:34 PM
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Advice requested, fellow Fools.

My MBNA cc (balance $8100) is at a 0% rate that expires on 2/8/06. Then it goes to an 11.9% variable rate, and will be the highest rate card I have. Per the snowball calculator, it is my #1 priority for payoff even now, while still at 0%. I've managed to whittle it down from a high of about $17000. It's due to be paid off completely in May 2006.

I currently have $9200 in an ING fund, $6650 of which is earmarked for known periodic expenses (tuition, loan repayments, auto insurance premiums); the rest is for auto ins. deductibles ($2000) and emergencies ($550).

I am tempted to take $5650 from my ING account and pay off the whole MBNA balance before it starts accruing interest. (February's snowball will include $2450 to the MBNA card, and 2450+5650=8100.)

However, that will put me behind track to pay my periodic expenses, and I'll need to up my monthly ING transfer by at least $620/month for the next 5 months to recoup in time to pay my periodic bills at their due dates ($1130/month if I also want to recoup my deductible/emergency money).

What do you guys think I should do? Paying MBNA off before they get any interest would feel good, and I estimate I'd save $500. But the trade-off would be less financial security in the short-term, and I don't know how/if I'd come up with the extra money to repay my ING fund.

Actually, I sort of do - I'd take it from the end of month "leftover" that usually goes to the cc's or to pad the next month's budget. Trying to figure out the opportunity cost associated with that makes my head spin, though (and makes me really anxious about coming up short), so I'll stop there.

So, should I take the plunge and pay off the MBNA card in full, or just stay the course I'm on right now?

Thanks for reading this far,
FIgirl



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