Women In The Black

My husband and I acquired significant credit card debt several years ago when we were both students and working part time. I am desperate to pay it off, but he would rather make the minimum payments and build a nest egg. What is more important?

December 2, 2012   Anonymous, Sydney NSW
Answer:

While it may feel good to think that you’re saving money for a nest egg, it isn’t as financially sound a decision as paying off credit card debt first. This is because interest rates on credit cards are generally significantly higher than rates you can earn on savings accounts. And it’s money you’re paying to the bank, not putting in your own pocket. The faster you can pay down your credit card debt, the faster you can get into saving your own money and building that nest egg. I believe it’s more important to pay off credit card debt first, then get your savings plan going. You’ll be further ahead sooner.

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This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

Expert Profile

Naomi Rosenthal
Naomi Rosenthal   Personal & Small Business Wealth Expert

Financial Planning Consultant at Tudor Invest specialising in financial matters for working women.

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