Personal finance guru Suze Orman is changing her tune about credit card debt. Before unemployment reached a 26-year high — nearly every expert advised people to pay down their credit card debt before starting an emergency fund. Now it seems that the advice has changed.
“If you have an unpaid credit card balance [and] not much saved up in emergency savings, I need you to listen up. My advice has changed. I want you to only pay the minimum due on your credit card balance, and instead, make it your top priority to build as much of an emergency cash fund as you can,” Orman said on the program.
Why would such a fundamental lesson change? Well, because the odds have changed. In general, during a time of rapidly increasing unemployment — people are much more likely to be plunged into crisis in the short term — meaning that you’re not necessarily saving for a rainy-day-far-off-in-the-future disaster — but one that might happen soon.
Let’s face it, if the sh*t really hits the fan — you’ll want to have some cash on hand. If you already have an emergency fund saved up… great! Pay off your credit card debt!