pay off credit cards or save for economic disaster?

Question

Just like everyone else I'm just trying to handle some debt I've racked up over the past 3 years or so....I have a pretty nice tax refund in addition to about 5,000 dollars in the bank. Should I save money in case the economy gets worse (which it will...) or should I start paying off my debts and hope I don't lose my job during the recession??
I think my job is pretty stable---I work for a large company with promising numbers from 2008...infact its the only company I know of thats still hiring people like crazy. What should I do?

Anonymous · Accepted Answer

Set aside 6 months income.  With the rest, pay off whatever you can.  This way if you lose you job in the future, you can survive up to 6 months.  Plus, your expenses will be less now and then since you'll have paid off debt.

With a bunch of new hires, it is likely that they would go before you if they start laying people off.

bluebell · Answer

Let's see  -  as long as you have debt, it is costing you.  If you save your money and then lose your job  -  the debts will still be there, eating up your available funds.  And there is every chance interest rates will rise, so they will cost you even more.  Keep some in the bank as  a cushion in case of emergency, and then pay every other cent you can to eliminate the debt.  This is one headache you can do without.

Anonymous · Answer

There is no reason to be carrying credit card debt.
It not only ruins your credit score, the apr steals your money.
Pay off the cards.
If you lose your job, you can use your cards to get you by.
The credit card companies will have no idea you are not working - since employment status is not reported on your credit reports.
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Anonymous · Answer

save 1000 for emergencies, and start paying of debt. 

the baby steps work if followed over time.

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pay off credit cards or save for economic disaster?

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