To Pay Off or Not To Pay Off

[Mickeys gal 52]

To Pay Off or Not To Pay Off Loan Debt
That is the question.
Whether ‘tis nobler to be debt-free and take the dip in credit score (mine dropped 10 points after paying off my student loan debt)
When is it ever better to keep the debt?
Does a person inadvertently shoot themselves in the foot by paying off earlier than they had to?

As for me, I love having my contract paid off. Just paying the dues is enough for me.

 

[hsmamato2]

I voted for "pay off ASAP", but I would have voted for something like "pay debt in a timely manner" instead. I don't see a reason to put yourself in an uncomfortable situation paying every penny into debt (ala Dave Ramsey) if your only debt is something like a mortgage or a car. Of course, if you can pay down your debt faster and still live comfortably, that's cool too. We are now 100% debt free and it feels great not throw money away on interest.

Oh, and my credit score is over 800 and we have not paid credit card interest in over 30 years.

Similiar situation with debt here..... Don't pay interest on any cc's (paid in full monthly) no car loans for many years, paid off 30 yr mortgage in 16 (last year) scores still in mid- high 800's,no changes there. I had a choice a few years back, focus extra $ and pay down our mortgage asap,or invest that $ and pay mortgage normally. I chose mortgage...and I fully know what my options were.
Since it got paid off (100% debt free) ,we had some significant life events that happened unexpectedly,and being debt free made it all much more bearable! the combo of no debt+ full emergency fund meant we could still enjoy our comfortable home we'd worked very hard to attain...I don't like to imagine how this could have gone if we still had a mortgage payment to worry about.... I always vote "pay debt asap"

 

[hsmamato2]

Has to be noted and your post is a good example of it....

You do not live debt free from the bolded. You are in debt for a month, then pay the debt. Repeat every month. Those of us who use credit cards to pay our expenses then pay them off at the end of the month or biweekly when paid are essentially debt free in spirit, but not debt free on paper.

Not having loans but having and paying off a rolling monthly debt is different than using your cash to pay all your bills and not having any loans or credit at all.

Another example. Quote states using and paying off credit cards. It's still credit and working for your credit score even if it's for only a month and you pay it before accruing interest to be paid.


rodneygt

This is actually true....and the OP's title was about paying off the debt, not necessarily about a credit score change... I know it's connected but still... I consider myself debt free yet you are correct, I pay my cc bills monthly,so I technically have that debt to add to my credit score each month. I still stand firmly with my own experience, debt free is the goal. And that credit card 'technicality' would only become a true 'debt' IMHO if I have to pay interest charges on it. A true debt free life would be all cash only all the time. BTW @MrsPete I remember you on the budget board many years ago.... you have always lived an admirably frugal lifestyle...

 

[tvguy]

This is actually true....and the OP's title was about paying off the debt, not necessarily about a credit score change... I know it's connected but still... I consider myself debt free yet you are correct, I pay my cc bills monthly,so I technically have that debt to add to my credit score each month. I still stand firmly with my own experience, debt free is the goal. And that credit card 'technicality' would only become a true 'debt' IMHO if I have to pay interest charges on it. A true debt free life would be all cash only all the time. BTW @MrsPete I remember you on the budget board many years ago.... you have always lived an admirably frugal lifestyle...

I've just been in the habit of coming home and paying off anything I have charged that day. Just went to the grocery store and my $89 charge at 7:45 am this morning was paid off just now, at 8:45 am when I got home. That is how most of by debt is handled. Paid off within a few hours of being charged.

 

[DisneySoldier]

There are plenty of legitimate reasons why people (in general, not just you specifically) need to have good credit scores.

5. If you happen to be a military member who needs a Secret Clearance, a good credit score is essential to obtaining/maintaining it.

6. If you are a private citizen (non military) working for a Government contractor or the DoD in some capacity, who holds a Top Secret Clearance, you need to maintain a high credit score and a pretty immaculate credit profile. Losing your TSC usually means losing your job.

It's probably not your intent to imply that a "high credit score" is necessary to have either a Secret or Top Secret security clearance, but instead - someone will be denied a security clearance (or have it revoked) due to "bad credit" in which they have a history of not paying their financial obligations.

Since a lot of people initially applying for a security clearance don't have much of a history with creditors - they won't have a "high" credit score. Therefore, the National Agency Check (NAC) for a Secret clearance, and Single Scope Background Investigation (SSBI) for a TS clearance don't have a credit score requirement when determining someone's eligibility for the clearance.

 

[mrodgers]

I've just been in the habit of coming home and paying off anything I have charged that day. Just went to the grocery store and my $89 charge at 7:45 am this morning was paid off just now, at 8:45 am when I got home. That is how most of by debt is handled. Paid off within a few hours of being charged.

I have to wait a day or 2 because charges at 7:45 am would be pending charges until at least the next day.

I typically just record old school my credit card usage in Excel like a checkbook register of old. I let them go for the 2 weeks then pay the last 2 weeks of charges when I get paid, using last week's paycheck.

 

[tvguy]

I have to wait a day or 2 because charges at 7:45 am would be pending charges until at least the next day.

I typically just record old school my credit card usage in Excel like a checkbook register of old. I let them go for the 2 weeks then pay the last 2 weeks of charges when I get paid, using last week's paycheck.

No, it can be several days before the charge actually posts so I end up with a credit balance. Although the processing company my mechanic uses usually gets charges posted in the 15 minutes it takes me to get home from the repair shop. I still use my checkbook register for my checking account although almost all transfers are electronic, not checks. My daughter finally threw in the towel three years ago when she bought a house and ordered checks for her checking account. Many of the services she uses still only accept cash or check. Gardeners, handymen, alarm repair people. And she saved 5% on the $10,000 bill to replace her HVAC system by using a check instead of her debit card.