Crush Debt or Grow Investments? How to Make the Best Choice for You
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What are the best strategies for paying off credit card debt?
Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. If there's one question we get more often than any other on the show, it's probably what's the best way to pay off debt. That goes for debt of all kinds. Mortgage debt, student loan debt, credit card debt, car debt, you name it. If it's a debt, we get questions about it. And there's always lots of news around debt, news that we've covered throughout the year. So today for our special series featuring the best of smart money 2024, we are reaching back into the archives for our favorite segments about debt and how to pay it off. It's a best of for best practices. Now onto the show.
Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles.
And I'm Sarah Rathner. If you have a money question for the nerds, call or text us on the nerd hotline at 901-730-6373. That's 901-730-NERD. Or email us at podcast at nerdwallet.com.
Follow us wherever you get your podcasts. And if you like what you hear, please leave us a review and tell a friend. In this episode, we are talking with a listener, Adam, who's 35 and lives in Colorado. Adam has some questions about what to do with a windfall, whether it's wisest to use it to pay off credit card debt or invest it. Adam, welcome to Smart Money. Thank you, Sean. Thank you, Sarah. Happy to be here. Great to have you on. So let's start by getting to know you a little bit, in part because I know Sarah and I, and I'm sure our listeners are nosy people. So tell us a bit about your financial life right now. What's your income like, your debts, your financial goals, the whole spectrum of things?
Sure. So I'm happily married with two little boys. One's four and one's a year and a half. We live in Colorado. I work full time as a professional firefighter and my wife works in the restaurant industry. We have a pretty healthy retirement thanks to a state pension that I'm a part of. And we live comfortably. We own our house. We have two cars. We're very fortunate to have a roof over our heads. But we do have some credit card debt that set us aside. You You know, I need, I break my tooth or what have you. We've had a couple expenses. So we have that and we're trying to build a college fund for our children with the 529s. Other than that, we're just your normal average Americans trying to plug through life and provide the best life we can for our children.
Well, it seems like you've checked a lot of the American dream boxes there with kids and a house and a retirement fund. So that's great to hear. Congratulations on achieving that because by 35, that's a lot to accomplish, especially for folks in our generation. And before we get too far into this conversation, I did want to remind folks that we are not financial or investment advisors. And Adam, we're not going to tell you what to do with your money in this conversation. It's really just some nerdy food for thought for you as you consider what to do with all of your financial goals. So I know that you are debating what to do with a windfall that you might be getting. So As it relates to your credit card debt, your investment goals, other life goals that you have, how would you consider using a windfall currently?
So we were fortunate enough to apply for and get a new credit card where we did a balance transfer at 0% APR. So our goal in 2024 is to hammer out as much as we can to pay down that debt at the 0% interest. So everything's been transferred to that card except for one card that has about $1,000 balance on it. So that's one piece of the puzzle. The other piece of the puzzle is I have a 457 account through work. That is an additional retirement account outside my pension. And then I have a Roth that I just set up completely on my own just this year just to diversify my retirement accounts. So this windfall could go either into the 457 payoff credit card debt, or we could even put it into my children's 529. So-
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