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5 Moves You May Want to Put Off Until After Your Credit Card Debt is Gone

July 16, 2014
Credit Cards
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While credit card debt doesn’t necessarily keep you from reaching certain milestones in life — like buying a house, having a baby or changing jobs — it definitely makes things more difficult. To keep yourself from financial overexertion, you may want to hold off on the following events until after your credit card debt is paid off.

First things first: What’s so wrong with credit card debt?

The Nerds are big fans of credit cards, but not revolving credit card debt. Why? A credit card is generally the most expensive form of financing, and keeping a high balance can hurt your credit score. Credit card interest rates are in the double digits, and you’ll be hard pressed to find a better return on your investment than paying off existing credit card debt.

Nerd tip: The exception to this is the employer match on your 401(k), which offers a 50-100% return on investment. Don’t turn down free money!

OK, so what are some events I might want to put off until my credit card debt is gone?

The might not be an easy sell, but try to wait to do the following until your credit card debt is paid off:

  • Get married: The average wedding in America costs $25,200, or about half of the average median household income. Ideally, you’ll take the time to save up the amount you need to pay for the wedding and pay off your credit card debt. The honeymoon will be much more relaxing knowing you’re entering your marriage consumer debt-free.

  • Have a baby: First comes love, then comes marriage, then comes a baby that will cost you roughly $241,080 from age 0 to 18, according to a USDA report. And, if you can believe it, this sum doesn’t include helping your Mini Me pay for college. Don’t let credit card debt contribute to your sleepless nights by paying it off before welcoming your bundle of joy home.

  • Buy a home: To avoid PMI (private mortgage insurance) when buying a home, you need a down payment of at least 20%. But that’s not your only financial hurdle to homeownership. Property taxes, homeowner’s insurance, repairs, closing costs and renovations will cost you thousands of dollars per year. Pay off your credit card debt before you save up your down payment and slush fund to cover the costs of homeownership. This will keep your American Dream from becoming a white-picket nightmare.

  • Switch jobs: If you’re considering a new career, you may go through a period of unemployment and/or a gap in income. Having credit card debt adds to the monthly bills you need to pay, so it’s best to eradicate it before taking the leap.

  • Retire: Whether you dream of leaving the workplace to travel the world or to spend tons of time with your family, credit card debt can keep you from your post-work dreams. Most experts recommend getting rid of all debt — including the mortgage — before you retire. This will keep your annual expenses low, which will help you avoid running out of money in retirement.

It may not be possible or practical to put off all of these things until your debt is gone, but it will definitely make your life financially easier. These are expensive life events, and the added weight of credit card debt can add stress and anxiety to things that otherwise should be happy occurrences.

Bottom line: Your big life events are made easier if you don’t have credit card debt. By eliminating these extra payments from your monthly budget, you’ll be able to enjoy these moments, instead of stressing out about how to pay for them. If you’re unable or unwilling to wait, make paying off credit card debt your next priority to avoid as much interest as possible.

Credit card and wedding ring image via Shutterstock