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Ask Sallie: Where Does Credit Card Debt Fit Into My Budget? (Video)

By Sallie Krawcheck

Sometimes credit card debt is unavoidable. The big thing is to pay it off as fast as possible so that you don’t pay more than you need to in interest. But how? Here’s Sallie’s advice.


Sallie’s answer:

If I have credit card debt, where does that come out of the 50/30/20 rule?

For those of you who aren’t familiar, the 50/30/20 rule addresses your take-home pay and how it should be broken up. So 50% typically is for needs. 30% goes to fun. And the 20% is for Future You.

Where does the credit card debt come out of? Everywhere. Credit card debt is super expensive, it eats away at your wealth, it eats away at your ability to have a great future. And so I would take it across the whole darn thing, and work as hard as you can to get it paid down.

Transfer it, if you can, to a 0% interest rate card so you can get the payment levels down. Then be very disciplined about taking that and paying it down as quickly as you can. Because until you are, if you’re investing and you’ve got a credit card debt, it can mean rather than moving forward, you’re moving backwards.

Disclosures

© 2018 Ellevest, Inc. All Rights Reserved.

The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.

The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.

Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.

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Sallie Krawcheck

Sallie Krawcheck is the Co-Founder & CEO of Ellevest. Her life’s mission is to help women to reach their financial and professional goals.