She wants to know what she should do regarding her credit card debt of $600, when she starts law school in the Fall. Should she
1.Pay of the entire $600 balance with her law school student loan check
2. Pay the over limit amount and set up six automatic payments to establish a good payment history.
Simple enough right?
First I have a couple of questions
1. Will you be going to law school part time, or full time?
2. Do you have any other income coming in besides the student loan check?
3. Is this your only debt besides student loans?
4. Do you have an emergency fund?
Now if I were you I would pay that balance off with my check. Why? I think credit cards are the DEVILLLLLLLLL, and I only use them for what they are worth. I usually pay off all my balances in full and have a really great credit score. I would then put the card in a tupperware dish full of water and freeze it so that I don't use it anymore, or you can cut it up. I am overly dramatic which is why I freeze mine.
Whatever you do, do not close the card!!! Leaving the card open and unused will actually help your credit score while closing the account will damage it.
Next, I would use any other income ( I think you said you were starting a new job in July) I have and build an emergency fund. Start with trying to put at least $1000 in it and put that in a money market account to be used only for emergencies. When you get paid contribute a set amount each month to the account until if reaches 8 months of your expenses.
I hope this helps you. I think if you do this, stay away from debt and live by a budget every month you will be well on your way to becoming a prosperous lawyer one day!
Fellow readers, what advice would you give B.C?
until next time, think prosperous thoughts