[ARCHIVED THREAD] - Finances: Need help (Page 1 of 2)
Posted: 12/12/2012 6:22:48 PM EDT
Seriously screwed myself with Credit Cards when after we bought our house. It needed several things repaired and replaced and I put the cost on my cards.  I'm now realizing what I've done, I've never missed a payment, but I'm in further than I wish to be. I have some options but I need to know what my most logical would be, because obviously I haven't made the best decision to this point. So my options are A. Keep paying 1.5x the min. Payment. B. Pull my mutual funds(I have full retirement at work) I want to pay the cards off quickly and help pay down the wife's student loans. I want to get out of debt as soon as possible, I'm tired of owing people money.
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Make the minimum payments, then pick the card with the lowest debt and focus on paying that off with your remaining money each month. Look for additional ways to save money and throw the savings toward your debt.
I wouldn't cash out on the retirement because you'll not only loose ground where retirement is concerned but you'll be paying out more in the form of taxes and penalties. |
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Make the minimum payments, then pick the card with the lowest debt and focus on paying that off with your remaining money each month. Look for additional ways to save money and throw the savings toward your debt. I wouldn't cash out on the retirement because you'll not only loose ground where retirement is concerned but you'll be paying out more in the form of taxes and penalties. This but I'd probably focus on the card with the highest interest rate and pay that off first while keeping the others at bay with minimum payments. Then go up a rung and knock off the next one and so on. Taking care of the smallest one first is a good morale booster but in terms of cost, the highest interest rate is the most expensive so I think it should be the first target. You're already motivated so you don't really need the morale booster, so do what is best financially (killing the costliest card first even if it has the largest balance) ETA: This is assuming that the interest rates are all fixed or close to it. If there is a penalty of some sort for only making the minimum payment then it becomes a bit more complicated. In that case, look at the two highest rate cards and pay off the smaller of the two debts first if it is a lot smaller and the rate is not much lower.. That gets you both a closed account and a paid off debt quicker. Good luck to you. You've recognized the trap which is the first step towards escaping it. 
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My thought process on the retirement is my wife and I both have state pension after 27 years, I'm 11 years in, she's 9 years in. While I'm aware it's probably not enough to live forever on, we don't have kids and our house will be paid off a couple of years before either of us retire. Therefore the Mutual Funds are just a bonus, that would be nice to have but not a necessity, is my logic in place, or is this more thinking that got me where I started.  Another option is to pull enough out of the mutual fund to pay one card off(I owe on 2), and make double(Triple?) payments to pay off the other.
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If I read you right, you have both a retirement fund through your work and a mutual fund that is separate (not tax deferred, just a fund you can use as you wish)?
If so, pay off the CC debt with the mutual fund as much and as soon as possible. There's no way the Mutual Fund is earning enough to cover the borrowing costs of your CCs. You might want to check what the limits are on the mutual fund, though. If you go below a certain balance they may require that you close the account. At least check into that so you can make an informed decision. If you close it then it might be a while before you gather enough to open another but if you keep it going you might be able to kick in a few bucks here and there. You can't kick in a few bucks here and there if the account is closed so it might be more difficult to save habitually. |
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If I read you right, you have both a retirement fund through your work and a mutual fund that is separate (not tax deferred, just a fund you can use as you wish)? If so, pay off the CC debt with the mutual fund as much and as soon as possible. There's no way the Mutual Fund is earning enough to cover the borrowing costs of your CCs. You might want to check what the limits are on the mutual fund, though. If you go below a certain balance they may require that you close the account. At least check into that so you can make an informed decision. If you close it then it might be a while before you gather enough to open another but if you keep it going you might be able to kick in a few bucks here and there. You can't kick in a few bucks here and there if the account is closed so it might be more difficult to save habitually. The tax consequences of closing it can be horrible, though. Without the hard numbers, we are shooting from the hip at best. |
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How much is the total CC debt?
You can probably go to a credit union and pull out a personal loan for debt consolidation for a low rate. These will allow you to pay off early and put you on a 3 - 5 year monthly installment plan where you are not throwing it all to interest. |
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If I read you right, you have both a retirement fund through your work and a mutual fund that is separate (not tax deferred, just a fund you can use as you wish)? You might want to check what the limits are on the mutual fund, though. If you go below a certain balance they may require that you close the account. At least check into that so you can make an informed decision. If you close it then it might be a while before you gather enough to open another but if you keep it going you might be able to kick in a few bucks here and there. You can't kick in a few bucks here and there if the account is closed so it might be more difficult to save habitually. Yes. We both have a separate retirement pensions through work, my wife is already contributing to her deferred comp. I want to pay this stupid plastic off so I can begin contributing to mine at work. We also have a small mutual fund, but it is enough to pay off my CC debt which is what I'm considering. |
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You have options, just weigh them carefully before you decide on a plan of attack. If possible you might look at doing a refinance of your mortgage at a lower interest rate and using the money saved every month to pay against your credit cards. You could decide which CC has the lowest interest rate, pay it off and then transfer the balance from your highest interest rate card to it. Pay it off, lather, rinse, repeat. or both.... There are other options like selling off all your shit and paying the cards off....but you'd have to weigh what you can get for your shit used vs replacement cost vs interest on your cards. If you have to take a worse fuckin' to replace the stuff with new than the cost of your CC interest...you'd lose money in the long run. Home equity loan? After all...you spent the money on fixin' up your house, right? Make it work for you. Where there's a will...there's a way. Keep pluggin away at it....you'll figure out how to kick it's ass.  |
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How much is the total CC debt? You can probably go to a credit union and pull out a personal loan for debt consolidation for a low rate. These will allow you to pay off early and put you on a 3 - 5 year monthly installment plan where you are not throwing it all to interest. About 8k The amount of the mutual fund is around 10-11k so I won't close it out completely. We have a very good life/health insurance policy, and both side of the family are well off. But I want to fix my screw up myself instead of turning to my family. I really want to avoid selling off my assets to fix a mistake, anything I have of value I would never get enough out of to pay of a significant portion.
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How much is the total CC debt? You can probably go to a credit union and pull out a personal loan for debt consolidation for a low rate. These will allow you to pay off early and put you on a 3 - 5 year monthly installment plan where you are not throwing it all to interest. About 8k The amount of the mutual fund is around 10-11k so I won't close it out completely. We have a very good life/health insurance policy, and both side of the family are well off. But I want to fix my screw up myself instead of turning to my family. I really want to avoid selling off my assets to fix a mistake, anything I have of value I would never get enough out of to pay of a significant portion.Get yourself to the credit union and ask about debt consolidation loans. You might only be able to hack up to $5k-$6k of that on an unsecured note, but you will be on a plan to get that stuff paid off fast and with no fees. |
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Are you honestly thinking youre going to collect on that state pension? Jesus...... Private pension..probably not. Alot of companies dissolve and take the pensions with them. I think it will be a bit harder to get the state to dissolve. At least I'm hoping so..If I can, I'll be young enough to draw my pension and get another part time job elsewhere.
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I don't know where to begin... The fact that you bought a house you knew needed lots of repairs or the fact you put them on a card to be paid at a later date.
Get out of debt. Now. Call Dave Ramsey if it helps you. Just make it top priority to get this mess behind you. Sell what you can if possible and see if you an defer payments on wires loans if she is able to. |
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Seriously $8k is not that much, better rethink everything you are doing. If you are that hurt over that or don't have enough rainy day fund to cover even half of that you are screwed already.
Edit: I'm basing this off you having no kids and both working full time. |
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Are you honestly thinking youre going to collect on that state pension? Jesus...... KY isn't CA...... and that is really immaterial. Its not immaterial. If he cashes out his mutual fund he loses out on that compound interest. Saying kentucky isnt california means nothing. |
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Quoted: Quoted: Quoted: Are you honestly thinking youre going to collect on that state pension? Jesus...... KY isn't CA...... and that is really immaterial. Its not immaterial. If he cashes out his mutual fund he loses out on that compound interest. Saying kentucky isnt california means nothing. Kentucky is solvent. |
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Are you honestly thinking youre going to collect on that state pension? Jesus...... KY isn't CA...... and that is really immaterial. Its not immaterial. If he cashes out his mutual fund he loses out on that compound interest. Saying kentucky isnt california means nothing. Kentucky is solvent.
Yeah, I was basing my response on his comment regarding solvency of the deferred funds. |
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Got anything that is easily sellable that is worth a couple of k? Sell it. Extra work around holiday times is available, but we're almost past that. See if you can sell something and try to raise your income. $8k is not that much money.
BTW, have any car payments at the moment? Car leases? |
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Taking from retirement or embedded savings should be a last resort.
Came here to say this. Sell shit and take side jobs on the weekend before you tap your retirement funds. Retirement requires a steady and unwavering commitment to saving and investing for 40 years. If you backtrack on that, you'll be digging yourself an even bigger hole. You might be able to make the mathematical argument to pull funds from retirement and pay down high interest debt but that just gives you a good excuse to avoid doing what you really should be doing which is reducing spending and increasing revenue. |
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Do you have a vehicle worth $8k you can finance or re-finance? Why would you do that?  Give the bank collateral (vehicle title) and they will give you a check. Use the check to pay off $8K in high interest debt Pay back debt at a reasonable rate (~3%) |
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Are you honestly thinking youre going to collect on that state pension? Jesus...... KY isn't CA...... and that is really immaterial. Its not immaterial. If he cashes out his mutual fund he loses out on that compound interest. Saying kentucky isnt california means nothing. Kentucky is solvent.
http://www.statebudgetsolutions.org/publications/detail/funding-levels-continue-to-drop-for-kentucky-state-pensions Really now?? Please have even the slightest clue about what you say before saying it... |
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Make the minimum payments, then pick the card with the lowest debt and focus on paying that off with your remaining money each month. No, pay down the card with the highest interest rate first. Exactly. Take this one step further- Pay back the card with the most money going to interest first. This is not always the account with the highest interest rate. |
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I don't know where to begin... The fact that you bought a house you knew needed lots of repairs or the fact you put them on a card to be paid at a later date. Get out of debt. Now. Call Dave Ramsey if it helps you. Just make it top priority to get this mess behind you. Sell what you can if possible and see if you an defer payments on wires loans if she is able to. The house was the house I grew up in, we bought it from my mother after my dad died. Yes, I know it was a material object I could have done without, however my dad built the house, it was the one thing he held in high regards since he came from nothing and they set me up a hell of a deal. However, I wasn't due to take possession of it till they were too old to take care of it, however Cancer is a bitch and doesn't give a shit about your plans. When my father got sick there were several things that went by the wayside while we took care of him, so when I bought the house I had the job of taking care of those things.  It didn't need a lot of repairs, 10k is hardly a lot when it comes to repairs on a house. However, considering my parents set aside 30k for me to use as a downpayment, I didn't even consider asking my grief stricken mother to fix them before I bought the house.  Even if it cost me a savings account, I consider it worthwhile investment, as the improvements we made raised the appraisal value from 145k to over 175.
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<snip> The tax consequences of closing it can be horrible, though. Without the hard numbers, we are shooting from the hip at best. He did say 'mutual fund'. I can see that one might have to take a lot of capital gains all at once or something like that, but is there something else to consider? It's been a few years since I closed a mutual fund so I could easily be missing something... |
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<snip> The tax consequences of closing it can be horrible, though. Without the hard numbers, we are shooting from the hip at best. He did say 'mutual fund'. I can see that one might have to take a lot of capital gains all at once or something like that, but is there something else to consider? It's been a few years since I closed a mutual fund so I could easily be missing something... If it's a mutual fund inside a 401k he'll have to pay taxes and penalties. |
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First off, take a deep breath. There are folks who have had a TON more debt than you, but were able to pay it off in a reasonable amount of time. I suggest you follow the plan laid out by Dave Ramsey (read his book, My Total Money Make Over - it is $10.00 right now on sale for Christmas). Step 1) Put aside a $1000 emergency fund. Step 2) Make a monthly budget and cut back where you can. You will probably be surprised on how much you can save by sticking to a written budget. Step 3) List your debts, lowest to highest amounts owed (ignoring the interest rate). Start paying minimum payments on EVERYTHING but the lowest amount owed. You need to start winning and this will help. As you knock out the lower amounts, roll those payments into the next debt on your list. That is called the debt snowball. You can find the rest of the steps in the Dave Ramsey book. Seriously, I would not make any hasty decisions until you have a written budget where you have cut back on anything that is not necessary in order to live. I think you should be able to pay this off, if you decide that you want to change your habits and start living differently. Eric  |
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Seriously screwed myself with Credit Cards when after we bought our house. It needed several things repaired and replaced and I put the cost on my cards. I'm now realizing what I've done, I've never missed a payment, but I'm in further than I wish to be. I have some options but I need to know what my most logical would be, because obviously I haven't made the best decision to this point. So my options are A. Keep paying 1.5x the min. Payment. B. Pull my mutual funds(I have full retirement at work) I want to pay the cards off quickly and help pay down the wife's student loans. I want to get out of debt as soon as possible, I'm tired of owing people money.Talk to all debtors, explain extreme financial hardship, ask to defer payments for six months. Pay off one card, at a time, with every goddamn dime you can throw at it. Start with the highest interest rate. Then get to the next one and knock it all out until it done and cut them the fuck up. If you have nice shit you can sell to clear it - do that, you dont own it anyways. My ex wife opened up six cards, maxed em out, wrote five bad checks with my name on em (to the gubberment) and rolled me for my car and the 30k I had in savings. Took me two years to pay off everything, three years later my credit was back up to 680, four years it was 7 something. One of the things I did was buy a car, payed 80% of the loan off in cash and then lowered my monthly payment to around 100 bucks a month. Did that for two years and paid the last bit off, but it was a huge boost on the repair side. |
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Seriously screwed myself with Credit Cards when after we bought our house. It needed several things repaired and replaced and I put the cost on my cards. I'm now realizing what I've done, I've never missed a payment, but I'm in further than I wish to be. I have some options but I need to know what my most logical would be, because obviously I haven't made the best decision to this point. So my options are A. Keep paying 1.5x the min. Payment. B. Pull my mutual funds(I have full retirement at work) I want to pay the cards off quickly and help pay down the wife's student loans. I want to get out of debt as soon as possible, I'm tired of owing people money.Are you paying interest on those cards? If so, have you thought about opening a new card, transferring the balance as 0% interest, and closing the old card? You can juggle it around for a while. There's some advantages to that most on here won't see so I won't delve into it (even with a fee.) |
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If I read you right, you have both a retirement fund through your work and a mutual fund that is separate (not tax deferred, just a fund you can use as you wish)? You might want to check what the limits are on the mutual fund, though. If you go below a certain balance they may require that you close the account. At least check into that so you can make an informed decision. If you close it then it might be a while before you gather enough to open another but if you keep it going you might be able to kick in a few bucks here and there. You can't kick in a few bucks here and there if the account is closed so it might be more difficult to save habitually. Yes. We both have a separate retirement pensions through work, my wife is already contributing to her deferred comp. I want to pay this stupid plastic off so I can begin contributing to mine at work. We also have a small mutual fund, but it is enough to pay off my CC debt which is what I'm considering. Have your wife cut her voluntary contributions back. Maybe just enough to get matching funds, but no more. You have to make big payments to get this cleaned up. Don't spend money on anything you don't absolutely need, including interest. Refinance that debt (move to another card, even signature loans at the bank might have a lower interest rate.). Pay off or refinance your highest interest debt first. Sell everything you don't really need, especially stuff you wouldn't be buying back later. Don't buy anything on a credit card with a balance-- you'll have to pay interest on it from the moment you purchase it, if you can't pay the balance in full every month. Cash is a better option, or charge to an "empty" credit card you can pay off 100% at the end of the billing cycle. Increase your income. Get overtime or a second job. Or a promotion/pay increase. You both work, you aren't behind on anything, and you don't owe that much. $8k? If you pay down a little more than $500 a month, you'll clear that in 16 months. Make a budget with your wife, max your payments on debt, minimize expenses, then stick to your plan. Oh, and saving vs. paying off credit cards-- paying off a 15% credit card is an immediate and guaranteed return in the form of saved interest. Bond mutual funds are paying about 2% now, and stocks have been doing well but are by no means guaranteed. Paying off your credit card is a risk free return. I wouldn't empty a retirement account and pay a penalty, but I would not hold on to a bigger bank balance than I needed. |
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You will be fine, tighten the belt and put everything you can towards the cards. If you have something you can sell then sell it and put that towards the cards. Create a plan and stick to it. 8k is not that much, you will spend quite a bit more than 8k paying it off but consider it a life lesson. |
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Question 1: How much money are we talking about ?
Question 2: How serious are you really? Question 3: Do you have a budget and do you track against it to ensure you are actually following it? A number of people have already hit on the salient points. Bottom line you need to increase income and decrease spending. Income: Work a second job, have wife work a second job, maneuver for a raise, look into a higher paying job elsewhere, etc. Also, sell off every last piece of non essential items. Got three glocks? Sell two of them. Got a CD collection? Burn them to computer and sell them for whatever you can get. Got a bunch of books? Take them to a used bookstore. Got a shitpile of clothes? Garage sale. Wife do crafts? Have her start selling them. Got a motorcycle? Sell it. Got a stack of old train stuff? Log into this new thing called Ebay and get to work. There's a million different things you can do to raise extra money. Ever last penny from these efforts goes towards the credit cards. Expenses: Look seriously at your expenses and how you can reduce them. Have a gas guzzling SUV? Sell it for a beater Honda and put savings towards debt. Go out to eat a couple times a month? Not any more. Got a big house with unused rooms? Close them off and quit heating them. Got a $80/month cable bill? Look into a barebones basic cable package (if not getting rid of it totally). Wife only buys name brand groceries? Wrong answer, get comfy with the Save-A-Lots, Aldi's and Dollar Generals of the world. Look at your insurance. Can you get a cheaper rate while maintaining appropriate coverage's? Talk to some agents. Make 15 trips to town....combine them into one. Anything and everything you can attack to minimize your cash outflow you go after. Guess where all that savings goes? This is how we approached getting rid of the CC debt we stupidly acquired in your youth. Went after it and paid of a pretty sizable amount in less than 2 years and have never looked back. It can be done. It doesn't require you to rob your future to do it and it is very rewarding. But success depends entirely on how serious you are about this. Attack it with zeal and you can be free pretty quickly. Fiddle-fuck around with it and you'll be in debt for a long time. |