Ok so last month I cashed in my savings to retire a truly ridiculous credit card debt. Upside is that I have no more credit card debt! No more throwing away thousands of dollars a year on interest.
The bad news is that I also have no savings. I have started using YNAB and have a positive cash flow, but not enough history yet to really get a sense of what typical spending is for me.
I have a single, consolidated federal student loan. Current principal + accrued interest is 35,879 with an interest rate of 4.875%. This is my only current debt. Incidentally, I now make too much money to qualify for the student loan interest tax deduction.
Do I rebuild savings or pay more towards the loan? I was paying $500/month in credit card payments, so that amount can go towards either savings or the loan (or both, I suppose), with no other changes to my monthly budget. I plan on using YNAB to identify and plug further holes, I've used it in the past and liked it a lot. But for the purposes of this question assume I have $500/month to play with.
Having no cash savings is an uncomfortable position for me, and for whatever psychological reason I like having 10k+ in the bank in order to feel secure. That's why it took me so long to just huck it all at the credit card, which was dumb thinking that cost me a lot of money over the last 2 years. I'd prefer to be less dumb going forward...