Should I pay off credit cards or save? Why?
Step 1: Stop spending everything you earn (and then some with credit cards). That will cause money to accumulate. If you don't have at least 10% of your gross pay leftover every month, you're doing something wrong. Aggressive folks I know easily live 20% below their means and the ones that work at it are living 30% or more below. Don't think of that as savings, think of it as creating a stream of cash you can point at things.Step 2: Use that stream to put out your credit card fires first. High interest debt is burning up your money. It's also highly unlikely you'll out earn 15 - 18% returns even with brilliant investments. That goes for most other loans too. If your interest rate is 7ish-% or higher on anything from car and house to school loans, put out those fires and pay off the debt first before doing anything else with your cash stream.Step 3: Once the high interest debt is paid off, then worry about building a cash buffer and investing. Point the stream at a savings account until you have enough to go a few months without work. Bad things happen and you need cash on hand to fix them. A pile of money also lets you make better long term decisions about what to do about more money.Once you've put out the credit card fires and filled up your savings account, then you can figure out what types of investments make sense to point your cash stream at next.
Using a Credit Card to Pay Off a Credit Card?
That's not a good idea. Especially if the one bill is a lot of money. Because then you will just have to pay that off on the other credit card. If you keep bouncing the amount due back and forth between credit cards, either the companies are going to catch on and come after you, or you will continue to ring up your debt so high you'll never be able to pay it. My mom's friend did that. She got so caught up between the two bills that she's over $100,000 in debt right now. If you can't afford to pay off the whole bill, pay off as much as you can, and please call the company. If you explain your situation to them, they might be nice and give you an extension or something. It also looks really bad on your credit report. If you're going to ring up charges higher than you can afford to pay, you might want to request that they lower your credit line to prevent you from doing it again. It's not a bad thing or anything, and I'm not trying to sound judgemental or mean, I just don't want to see you keep getting stuck in that kind of situation because it will bite you in the butt in the end. Credit's not something to mess with. Those people will seriously hunt you down and beat down your door looking for their money. Don't mess with the credit companies.