Page Section Navigation
Go to: Header
Go to: Utility Navigation
Go to: Primary Navigation
Go to: Content
Go to: Footer
Blogging for Change Blogging For Change
by sitecore\kmcgrigg on May 03, 2011
In honor of Financial Literacy Month, Jean Chatzky, author and financial editor for the Today Show, is personally responding to five consumer questions. Today, Jean answers Nicole's question about draining savings to repay debt.

Jean Chatzky Paying Off Debt

Question: I have enough in my savings to pay off all my creditors in full. But with an upcoming wedding I don't want to drain my savings. Should I pay off my creditors with all my savings or should I continue to save and double my payments to my creditors? -Nicole

Answer: Hi Nicole and congratulations on the wedding! I don’t want to see you drain your savings for a different reason – the job market now is really tough. Should you find yourself out of work, you need a six-to-nine month emergency cushion in savings. It should be enough for you to live on, i.e. to cover your fixed expenses, but not a whole lot of extras. I’d figure out how much of your savings this represents and leave that amount untouched. Take the rest and use it to pay of your high interest rate creditors. Then, use new money coming in to pay down any debt left on the credit cards as quickly as possible. The fastest way to do this will be to put all your extra money toward the debt with the highest interest rate, while making the minimum payments on the rest. Once that debt is gone, move to the debt with the next highest interest rate. And so on…. Good luck! -Jean Chatzky

You might also enjoy reading:

Jean Chatzky's response to Patricia's question about opening an IRA
Jean Chatzky's response to Danielle about new financial advice


Payday Loan says:
December 29, 2012

Debt has no way or means and surely indefinite, if in case you spend your savings and such circumstance arose that you need cash instant your priority would be going for a loan. That would be an invitation to any debt, but if you know how to manage your finances then it would be quite easy to handle the situation.

Please provide the comments.
Security Code:
Please correct the code.


Answers to your financial questions 

Ask the Experts to receive advice and information for your financial situation.

 Have a question? Ask the Experts