Credit debt payoff vs. "nest egg" for home?

[Flaxbee]

So, say you sell your home and have some $$ left over after the home loan is paid off, and you're getting ready to move to a new town, but
you aren't sure if the town you're moving to is the one you want to stay in forever... would you use the left-over money to pay off all credit card debt and have a little $$ remaining, or would you pay off about 2/3 of the debt and have a more substantial "nest egg" for a future home purchase? Of course, you're completely confused about what kind of home you want, anyway - house, loft or boat.


Keep in mind you don't yet have a job in the new town, so some money is going to have to go to rent and survival while job hunting....


What would YOU do?

[Worst Username Ever]

1. Bank it....

until you have a job and income. Once that is done, get rid of the credit cards before you do anything. A credit card that COSTS 15% vs a nest egg that EARNS 6%, the math is obvious. The debt is hurting you more that the nest egg is benefiting you.

Once you get the credit cards paid off, the money you normally would have paid to them each month should then go into your nest egg.

[Bunny]

3. You nailed it exactly.

Watch every dime until you get a good, reliable job, then pay off the credit cards ASAP. Only then should you worry about your nest egg. I dearly wish I had taken my own advice...

[Worst Username Ever]

5. Thanx

I knew my securites licenses were good for something!

[MsUnderstood]

2. Consider the investment

Where are you going to put your nest egg? What kind of interest return are you going to get out of it?

How much is the interest you are paying on your credit cards?

It would not make any sense to pay 9% interest on credit cards while you are earning 3% on a CD for your "nest egg". You would loose 6% annually. It would make more sense to pay it all of then rebuild your nest egg by taking the money you would have put into credit cards into a savings account.

However, if you can do the bait and switch with your remaining debt (get new cards with 0% interest and work to pay that off) then it is perfectly sensible not to pay off all your debt.

[The_Casual_Observer]

4. You would probably just run up the credit cards again

and cash is hard to get. I would keep the cash.

[leftyandproud]

6. look at it this way..

if you were debt free, would you borrow at 18% to finance a new home?

hell no.

save an emergency fund and use the rest to pay down the high interest debt...you can get a 6% mortgage when the time comes.