EPISODE 44 ~ SAVE MORE: Savings Account: Use Your Emergency Savings For A Real Emergency – Credit Card Debt

Save more money with The Easy Money Show

Time now for our save more segment of the show:  I know lots of smart people who have a good-sized savings account and credit card debt. And that is just dumb.

Oh, did I say that out loud? Refusing to use a savings account to pay off credit card debt is like barricading your front door for security, but then letting thieves waltz in and out your back door.

I know, I know, people feel it’s important to save for emergencies. Trust me, credit card debt is an emergency. It is sapping your financial strength.  Think of it this way: You can instantly make a “profit” by using low-interest savings to pay off high interest credit card debt.  Hey, maybe this should have been a “make more” segment! 

Here’s the rationale: If your credit card charges 17 percent interest and your savings account yields just two percent interest, you can make a 15 percent “profit” —I have my fingers up in air quotes right now— by using the savings to pay off the debt. Money managers would kill to make that kind of gain in the stock market!   

Still not convinced?  let me do the math for somebody who has $10,000 worth of credit card debt.  That $10,000 at 17 percent credit card interest, will cost you $1,700.  AND that $10,000 in a savings account at 2 percent interest will only earn you $200.  SO, you can SAVE —or “make” $1,500 by using the savings to pay off the credit card debt.



Credit card debt @ 17%:

$1,700 charged

Savings account @ 2%

$   200 earned



If this numbers-based argument didn’t convince you and you are STILL clinging to the idea that you need a large savings account in case of an emergency EVEN when you have credit card debt, then here’s another way to think of it: You should take the sure savings and gamble on the possible costs. You are guaranteed to save money by using your savings to pay your debt. You can gamble that you may or may not have a future emergency. And, If you do, guess what?  You can use your credit card to pay for it.  Still squeamish?  Let’s compromise.  Keep $1,000 in your savings account as your comfort blankie.  Send the rest to your credit card company and immediately save big money.

A couple of caveats: I am not talking about tapping into a 401k or IRA here. If you already have money in one of these retirement accounts, don’t withdraw it, because the penalties could well be worse than the credit card interest. If you are contributing to retirement accounts WHILE you have credit card debt, you should stop and pay the debt first. The one exception is if your employer makes a match, in which case you should consider contributing just the amount that is matched to get the free money.  Then, use the REST of your available money to pay off that credit card. 

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EPISODE 26 ~ SAVE MORE: Shop Where You Sell: Buy Gorgeous Threads At The Consignment Stores Where You Sell

Save more money with The Easy Money Show

Sandra Packwood, owner of Do You Deja Vous, already taught us how to sell at consignment shops. Now, she’s doing double duty by  teaching us how to “Save More” by consignment shopping, as well!   

So Sandra, the women who shop at your store, are their finances tight and they can’t afford to shop retail?  Or are they upscale but like a bargain?  What brings them in?

Both!  I get all kinds of women of all different ages and means.

Do you find that some people have to get over the idea of wearing someone else’s “used’ clothes?

Rarely.  Interestingly, the ones who are the most squeamish are teenage girls, perhaps because their parents have always bought them everything and they don’t understand the value of what they are getting.

What would you say to those folks to help them get over it?

Many of the clothes for sale in  my shop are brand new with tags on.  Others have been drycleaned.  Everything is in top condition.

Now let’s talk about the deals people get when they shop at a store like yours.,  Give me 2 or 3 examples of what things would cost new versus what you sell them for.

Gucci scarf: Original price $500.  Consignment Price: $222.

Kate Spade shoes: Original Price: $200.  Consignment price: $39.

Kate Spade Dress: Original Price: $350.  Consignment price: $129.

Would you say your shop is pretty typical as far as the percentage savings people can expect?

Yes, savings of 50-75%.

Do you think your customers wear your clothing on the down low and keep it a secret that they bought it at a consignment shop?  Or do they brag about it? 

Both!  Some women tell me they get so many compliments.  Some don’t tell because they don’t want their friends to come because they wear the same size and they don’t want the competition!

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