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Author: TMF2Aruba Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308881  
Subject: Re: $5000 at 4.9% Date: 9/4/2003 8:22 PM
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So, I have a postition in a certain stock worth 10K right now from ESPP shares. I also have $5000 in credit card debt, on one card, with a $22,000 limit. I'm way above water on this in terms of income, and if I were disciplined about it I could pay it off in about 3 months.

I know that one of the tenets of Foolish investing is no credit card debt. However, I'm already in the market by virtue of my ESPP (employee stock purchase program) shares. I also set aside money for short-term savings and sweep it into my brokerage account periodically. At this point, I am considering diversification, and further Foolish investment. I figure the interest rate is low enough, I make fairly large payments and still have enough to save plenty. Is there anything wrong with this assessment? I know the numbers game with credit card interest. I NEVER pay minimums, and I'm "comfortable" dealing with this debt (it was planned) rather methodically.


Hi Chris,

It sounds like you're doing just fine. You have debt which you can handle, and money set aside in emergency savings. In your case, I don't see any problems--you already even have a cushion with investments.

Since you say you'd be able to pay off your credit card debt in 3 months if you chose, my advice would be to do so. Even though the debt isn't currently an albatross around your neck, why not just get rid of it, and free yourself up with all the more cash to use for investing Foolishly? Just the fact that you even bring the question to the table suggests to me that you'd actually sleep better if you didn't have that debt hanging around. :-)

One other thing that would work to your advantage would be the ability to use the card as a tool to work for you. This would happen simply by paying the full amount each month, and even taking advantage of perks such as airmiles or cash back.

Bottom line: You have to do what makes you the most comfortable. Give it some thought, and good luck!

Tony
...but I still am...

Off2Aruba
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