To pay down the credit cards or not???

Question

This is always a big question. But I need a refresher. I gave some money stashed, should I pay off off the credit cards? Or since my credit is decent, just continue as I have been…investing in real estate.

Bjorn Ahlblad · Answer

I would definitely advise paying off credit cards every month! They have ruined many an investor.

Nathan A. · Answer

If it were me in my own situation with my own druthers, I would definitely pay off the credit cards.  But to compare the options on an apples-to-apples basis, what interest rate are you paying on your credit card debt? How does that compare to the ROI you can receive in any investments you might make?

Leo R. · Answer

@Pafoua Vang Xiong there's not enough info to go on here, because it depends on factors such as: how much debt is on the credit cards, what's the rate on that debt, how much cash do you have, what else can you do with that cash (and what types of returns could you get), what's your overall DTI look like and does the CC debt prevent you from qualifying for financing to invest in RE, what's the ratio between your debt and net worth, what's your income and cashflow, what other debts do you have, etc., etc., etc.

Depending on these types of factors, what makes sense for one person might not make sense for another person...for instance, a person who has a net worth of $10k, and who has $10k of credit card debt is probably over-leveraged...but a person with a net worth of $1 mil who has $10k of credit card debt is probably in OK shape (I say "probably" because there could be other factors in these peoples' finances that could change our assumptions--for instance, if the millionaire had $5 million in auto loans for exotic sports cars, they might be in trouble).

Context is everything.

Pafoua Vang Xiong · Answer

Thank you. For the replies. I shall pay those dirty credit cards off.

To pay down the credit cards or not???

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