So, I am finally catching up on my life and finances after my divorce.  This last year brought the end of my spouse support payments and an increase in my BAH so I am finally breathing again and I want to be out of debt.  I am living very much below my means now (as I was before the "pay" increases) and just need some advice.

Right now, I have:

Truck: Owe $11900 @3.49% interest.  Worth Aprox $23000. Payment is $475 mo. 26 payments left.

Credit card 1: Owe $11700. 10.65% interest rate.

Credit card 2: Owe $7000. 0% for 12 months. At $600 a month, will be paid off before the 0% wears off which I am willing and able to do.

Currently, I have been using Credit card 1 for daily expenses and paying more per month that I use. EX: use $1000 for gas, food, household and fun. Make a payment of $1600 on the card. Bank the rewards points. My average payment on the card has been aprox $1800 per month since January and use has been about $1000 per month give or take.  Which makes me think that I will pay off that card in about 1.5 to 2 years and spend over $1000 in interest.

Option 1: Refinance the truck for the full amount allowed on a 60 month loan. My payment will most likely be similar to what I am paying now. Take the difference and pay off the CC1 or as much as I can and live on cash while paying on the truck for 3 more years beyond my current loan and pay off CC2 over the next 12 months at 0%.

Option 2: Stay where I am. Pay off truck in 2 years. Pay off CC2 in 1 year. Roll over payments to CC2 and hope to pay it off in 1.5 to 2 years. (Approximate transfer date for me).

I have just recently started saving money (very little but it is something) and I want this to be over. I sold my 5th wheel trailer that I owed outright recently and put that money towards my overall CC debt. Time to buckle down and make this happen one way or the other.

If you pay the minimum on cc2, how fast can you pay cc1 off?  What does the interest rate go to on cc2 after the 0%?

Sell the truck, pay off a $7k CC with difference. Buy cheap car.


The problem is your behavior, and spreading your payments for another five years, isn't going to help you.

Slightly faster. Possibly 1 year instead of 2.  I think it goes to about 16%

Selling the truck is not an option unless I am in absolute financial disaster. As of now, I am making progress. The truck is not depreciating rapidly and is not a money pit.

My behavior is probably the majority of my issue. I agree. But, I am trying very hard to purchase only necessary items and stop looking at gun stuff online.

You probably don't want to hear it, but I think the smarter move, would be to sell the truck. Use the 10,000 you make to pay off the CC with an interest rate. Buy a cheaper car. Toyota is offering 0% interest right now, new Yaris is $15000. That puts a monthly payment around half of what you're paying now. And your CC is gone. Pay second CC off. Pay cheap car off. Be debt free.

You have nearly 20,000 in credit card debt. You are in financial disaster.

I'm not sure I understand the logic of paying anything above the minimum on the 0% CC right now either. Having a balance on that card costs you NOTHING right now. The balance on your other card is climbing rapidly. I can only imagine your interest charges are roughly $250 a month. I would shift CC 2 to minimum payment. Dump the extra into CC1. Even if you hang on to the truck for some reason.

Driving around in a beater is only temporary. Once you get your mess cleaned up, you'll be able to afford something a little nicer.

I know it sucks, but you're trying to get a fresh start on life.

The only way I would redo the truck to pay off the card is if if you cancel the card as soon as you pay it. Most people that do this end up running the card up again and then they have the same credit card debt and a huge car loan.

Credit cards are not that evil if you always pay in full every month without fail but if you don't they are stupid. The interest rates are outrageous.

If I woke up in your shoes I would sell the truck, buy a beater and pay everything to the credit cards. Once debt free I would save up for a better car. It is what I did. We had a $1,500 hail damaged piece of shit, then a $4,000 car, then an $8,000, then a $15,000....... and now have a 2017 luxury SUV all bought with cash. It is possible just takes discipline.

When I divorced my ex, she ran the finances, we had 17 credit cards with over $25k in CC debt and 2 car loans on top of it.

I know that many believe that having any vehicle over a minimum commuter is an absolutly unnecessary extravagance, but it is what I have and I am keeping it. It is not an easily replaceable vehicle as vehicles similar to it are going for more that $60k new. I plan to keep it for the long haul.

I plan on paying the minimum per month that it would take to pay off CC2 before the higher interest takes effect. That payment is $600 per month.  

I have made more than a $4000 dent in my debt in the last 5 months. More than I have made in the last year combined before that.

That is the plan. I have cancelled 15 of them. It seems a small issue to get out of the last 2 and move on.

Nobody is saying you cant have a nice vehicle. You are in a staggering amount of credit card debt. You don't have a truck. You own half a truck, and another truck worth of money owed to the credit card company. Number one priority needs to be paying it off. The interest alone on those credit cards, as I'm sure you're already aware, is killing you. The LAST thing I would do, is sign up for another 5 years of payments on a used truck that's already halfway paid for. All vehicles are easily replaceable.

On a side note, you mentioned BAH, does your unit have a financial specialist? You NEED to speak with them.

rather than do either of those, can you quaify for another 0 percent card?
I know a few still do that transfer for a year.
It isn't a total answer as you can't pay off both in a year, but it should save you the 10 percent for a year and then roll it to another card.

sell the dumb ass truck, buy $3500 civic and crush you credit card debt.

if you really "need" a truck, but a 15 year old f150 that will hold you over till you credit cards are paid off.

but hey if you want to keep and refinance a rapidly depreciating asset in light of a financial catastrophe.  awesome,  i think i read somewhere that is how bill gates made his fortune.

Not to sound like a jerk, or pompus in any way, because you are going through a difficult time.

Also, I'm far from rich, and definitely not money like @BlackFox , but I could write a check to pay off your truck, and your credit cards tomorrow.

I've been looking at buying my wife a new car for about three years now, but I just can't pull the trigger on one. $45k is a lot of money for a car, and she's never had a new car in her life. She's still driving around a 10 year old Honda CRV, and it's worth around $7k. It would be great to have a newer vehicle with amenities, but right now, you're driving around a nicer car than she is, and you're in the hole $31k.

Again, no one is saying you can't ever have a nice truck again, you just need to work on your mindset, and cleanup the debt first.

New trucks will always be available in the future, I promise you.

You probably don't want to hear this, but you can't afford the truck.  Sell it.  You'll have about 10K left over.  Use it to buy a used vehicle for cash, and use remainder for an emergency fund.  I started sleeping so much better at night once I had an emergency fund.

Credit card debt is killing you.  You mention having fun and charging it on your card.  You need to throw every spare dollar at that credit card debt.  Fun is something you should be having when you aren't living beyond your means.  You shouldn't eat at a restaurant.  You should be exceedingly frugal.

Imagine your life with no $475/m truck payment and no credit card payments on either card to make.  How much cash would you have every month?  Wouldn't that be awesome?

Sell the truck.  It's eating you alive in gas costs anyway -- you're in the military, you need a commuter vehicle, not a brodozer to look cool to your buddies.

Sell truck, pay off cc1, buy commuter car a 0% interest and dump everything you were paying on CC1 and the reduction in your gas bill and the interest you were paying on the truck loan onto cc2 until it's paid off.  Then you can look at trading for a nicer vehicle.

BTW, refinancing the truck would be absolutely idiotic.  It's a depreciating asset that you already owe 70% of the value on (no, your 50% number is not correct -- you won't sell it for the retail KBB value, that's what the dealer charges you for it after they steal it from you for half of that).  Your bank probably wouldn't even let you do it, but if they did it would absolutely ridiculous to do.

If you ACTUALLY wanted to get out of debt, sell the truck, buy something cheaper, and throw the money at the CC balances. 

I personally would not refinance the truck.

stop all use of the credit cards. Your not "banking points" your paying them to give you almost nothing in return. Points work great when you don't carry a balance.

I'd sell my truck for 23k, buy an 8-10k truck use the rest to pay off credit card #1.  Go crazy paying off other card.  Be debt free in about six months.

Owe 12k on the pickup and can pay off cc in 2 years? Honestly id keep it and hammer on cards.

If you can swing paying down 1k in debt a month that isn't bad.  I lived poor for a long time.  Im talking years i made 5 to 8 times the average salary and i drove a beat ass 4k dollar pickup. Looking back my life sucked bc i pinched pennies too much

A 20k dollar pickup isn't unreasonable these days.  You can pinch pennies all you want but its nice to live a little.

And picking up a date in your 25 year old Chevy with broken ac is crappy

There is a reoccurring theme here of selling the truck. Are you going to go bankrupt if you keep it? I doubt it but if you want to win with money that is the right choice. I seriously would walk before I financed a car that is how much of a bad idea I think it is. Do what you want though that is the good part about America. It just blows my mind how people tie so much of their identity to their vehicle. To me my truck is no different than a hammer. It is a tool I need to do what I do. I drive a nice truck now and all my tools are pretty nice but it surely hasn't always been that way. I damn sure wouldn't be putting my whole financial situation in jeopardy to drive a cool truck.

I came to post this as well. Your 10.65% interest rate is costing you much more than the 1-2% you get back on your purchases. Also, if you carry any balance on your credit card, ALL new purchases on the card immediately start accruing interest. There is no grace period if you carry a balance.

You need to stop using CC1 for your monthly expenses. Write a check or do direct debit from your checking account. Or do online billpay from your checking account so that you don't have to give direct debit access to anyone you don't want to have it. When you buy groceries or gas, use cash(better) or your debit card. When you pay with a card, most people tend to spend more money than they would with cash. Stop putting any balances whatsoever on either card.

If you can, try a new card with a long balance transfer period. My Chase card is forever trying to get me to transfer balances to them. Typically, it's 18 months with a 5% balance transfer fee or 12 months with a 3% transfer fee. Yeah, that transfer would cost you $300-500, but only once. And that's much less than you're spending on interest right now. And when you transfer the balances to the new card, NEVER USE IT FOR ANYTHING ELSE. Lock it in your safe and forget that you have it.

I probably wouldn't sell the truck, especially if its your only vehicle... I'd make min payments on the truck and try and transfer the high interest card to anything way lower. Chase Slate still has 0% transfers if you qualify. Pay it off ASAP. Monthly expenses must go straight to checking or be on a card that gets paid off monthly, paying interest on regular spending is bad. Live cheap and pay what you can.

Usually, when you're in debt, no one offers you free money.

But when you have zero debt, they're blowing up your mailbox with 21 month 0% interest and 0% fee for BT, with a $60k line.

I appreciate all the advice and I understand the concept of selling the truck vs keeping it and holding the debt.

I will not be refinancing it. I will start utilizing my checking account and I will be liquidating some of my reloading equipment that I have no plans to use.

I owe $11500 on the truck, it is useful for my way of life and not just in an entertainment way. I use it for more than just transportation. I see owing $11500 on a vehicle worth $24000 as better than owing $7000 on a vehicle worth $7000.

Thank you for the advice.

Lol, if your way of life is carrying a high level of credit card debt to keep a depreciating asset that will be worth half of what you think it is in 24 months, you figured it out.

Because their is no way a paid off 5000 dollar truck could possibly keep up with your way of life for 12 months or so.

I'm sure in two years when you cards are paid off
, you will take your 9000 dollar truck to the local dealer and trade it in on something like a raptor or something the like and be in twice the amount of debt you are in now

Your spending way too much money

If you owe 12k on a truck worth 24k. You could owe 0 on a vehicle worth 7k and have 5k in cash. Cash holds it value a bit better than a truck. 

1.  Sell truck.
2.  Buy used inexpensive truck.
3.  Take rest of money and pay off credit cards.
4.  Close credit cards.
5.  Build a big ass emergency fund.
6.  Invest.
7.  Buy new truck with cash.  
8.  Get rich.