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While some students may be cherishing their last week of freedom before the Spring semester arrives, many of us are experiencing the post-Holiday blues. Whether it’s the food, time with family, or relaxing vacation we will soon be missing, chances are our bank accounts are feeling equally depressed. With gift giving and New Year’s Eve festivities, it can be all too easy to splurge beyond our means.

If you remember the last blog post, we talked about setting goals. One of the hardest challenges with managing our financial lives is figuring out how to juggle multiple goals. Maybe your New Year’s resolution is to save more money and pay down your credit card debt. However, both goals may seem counterintuitive so which one is it? Should you focus on saving your money, or paying down debt?

From a purely financial standpoint, it makes plenty of sense to pay off the credit card debt. The average rate these days is around 15%. Meanwhile, money you have secured in a savings account is likely not earning even 1%. So using low interest savings to pay off the high cost credit card debt is a smart financial move.

But on the other hand, we certainly don’t want to deplete our emergency funds. We know that for many people, having that money aside to handle life’s “what ifs” is what helps us sleep at night! That being said, let’s make it your top priority to get it paid off ASAP. Here’s how:

1. Look into transferring your credit card balance to a new card that charges no interest for at least a year. Some cards offer a zero rate for 21 months; that gives you a lot of time to pay off the debt while not getting hit with interest charges. Be careful to look out for transfer fees, too and don’t charge a penny on this new card!

2. Use an online calculator to figure out how much you need to pay each month on your new card to have the balance paid off before the zero rate expires. That’s your new goal. Here’s a calculator you can use via bankrate.com http://www.bankrate.com/calculators/credit-cards/credit-card-payoff-calculator.aspx

3. If you are truly serious about getting rid of the credit card debt, you will always find a way to scale back on your spending. Instead of looking for one big-ticket expense you can drastically cut or eliminate, consider this strategy: Look for at least a dozen monthly expenses that you can cut by at least 10%. Once you add up the savings you may be very close to what you need to pay each month on the credit card balance.

4. If you are still coming up short, consider dipping into your emergency fund each month to make up the difference. It may make you feel uncomfortable, but don’t empty your entire account. This way, you still have money in your savings, but you are working fast and furious to get rid of your debt.

The ultimate sense of security will come when you are free of credit card debt AND you have an emergency savings fund. Please feel free to contact our office and one of our counselors can help create a personalized debt management plan for you. Good luck, Cyclones and we look forward to seeing you next week!