Financial Guru question???
- Thread starter saywin
- Start date
V8Assassin
100mi away ready 2 strike
- Joined
- Jun 6, 2007
Yes! The reason is simple, what is the interest rate on your cc? What interest rate is your money making?
The difference is how much you are losing to payments.
There are plenty of methods to resolving the debt, but unless you can put your money work making more than you are paying in cc interest it would probably be best to go ahead and pay it off.
Another way to look at it, if you paid off the cc debt, how long would it take to recoupe your 30K by making the same payments to a savings account as you are the cc company?
The only other option that might make sense, if you are determined to have credit available, would be to purchase a cd with the 30k, take a low interest revolving line of credit at your bank against the cd and pay off the card. You would still have the cash, but you would still have the debt. The only good thing is the interest rate would drop from the 21% range to the 7% range and you would have a line of credit at the bank. I would not recommend this strategy unless you have more cash than debt.
The difference is how much you are losing to payments.
There are plenty of methods to resolving the debt, but unless you can put your money work making more than you are paying in cc interest it would probably be best to go ahead and pay it off.
Another way to look at it, if you paid off the cc debt, how long would it take to recoupe your 30K by making the same payments to a savings account as you are the cc company?
The only other option that might make sense, if you are determined to have credit available, would be to purchase a cd with the 30k, take a low interest revolving line of credit at your bank against the cd and pay off the card. You would still have the cash, but you would still have the debt. The only good thing is the interest rate would drop from the 21% range to the 7% range and you would have a line of credit at the bank. I would not recommend this strategy unless you have more cash than debt.
0%
My wife and I pay 0% interest on the credit card. The actual dollar amount we owe is lower than 30k, but I have the same amount in debt as I do in savings. I just hate having credit cards now days. I have been listening to Dave Ramsey on the radio and I feel guilty having any CC debt. I suppose I could let my money earn interest but it's just the thought of having the debt that bothers me.
To make matters worst I want to get another Buick and that means I will have to borrow money or take it out of savings, that means more money either way you look at it!
Darn I wish I were richer!!!
My wife and I pay 0% interest on the credit card. The actual dollar amount we owe is lower than 30k, but I have the same amount in debt as I do in savings. I just hate having credit cards now days. I have been listening to Dave Ramsey on the radio and I feel guilty having any CC debt. I suppose I could let my money earn interest but it's just the thought of having the debt that bothers me.
To make matters worst I want to get another Buick and that means I will have to borrow money or take it out of savings, that means more money either way you look at it!
Darn I wish I were richer!!!
V8Assassin
100mi away ready 2 strike
- Joined
- Jun 6, 2007
How long is the zero percent in effect? Dave R has some great info, cc debt doesn't make much sense. My wife and I are on a debt paying mission right now, well as soon as I finish the car anyway
Not Sure
I can tell you that my wife has kept us at zero for the past 8 years. We have paid down alot of debt and we are doing well. I don't know how she does it, but she's very good at keeping 0%. I just don't know if she will be able to keep it up with todays economy!
How long is the zero percent in effect? Dave R has some great info, cc debt doesn't make much sense. My wife and I are on a debt paying mission right now, well as soon as I finish the car anyway
I can tell you that my wife has kept us at zero for the past 8 years. We have paid down alot of debt and we are doing well. I don't know how she does it, but she's very good at keeping 0%. I just don't know if she will be able to keep it up with todays economy!
V8Assassin
100mi away ready 2 strike
- Joined
- Jun 6, 2007
Personally I like to have some cash on hand just in case something happens. If your current plan is working, let it work. You could go ahead and take a large amount of cc debt out and retain some of the savings. Maybe set it up so the cc debt is gone in under a year and you get to keep some cash.
It really boils down to whatever you and your better half feel most comfortable with.
V8Assassin
100mi away ready 2 strike
- Joined
- Jun 6, 2007
I wouldn't if I had the money to buy it with cash. The cc's seem to be under control, do both. Pay off around 10-15k in cc and buy the car with the other 10-15k. There are some really nice cars on the market right now at good prices. Goes back to before, pay off some, buy the car, keep some emergency money (might need it with the new car )
oh yeah, after all that start saving again. you built it up once, you can do it again!
)oh yeah, after all that start saving again. you built it up once, you can do it again!
Gary Wells
White turbo Buick trailer park trash
- Joined
- Mar 2, 2002
I wouldn't even want to think of what type of monthly payment you guys have to make to keep from paying any interest on a cc debt of $30K. How much of the principal do you pay down each month in addition to the part that goes towards the monthly payment requirement?
If it were me, and I realize that it isn't, I hate owing anybody anything, I would probably pay off the cc 1st, or make a substantial gain towards paying it off. I personally would not like the thought of owing anybody that type of money on todays economy. HTH
If it were me, and I realize that it isn't, I hate owing anybody anything, I would probably pay off the cc 1st, or make a substantial gain towards paying it off. I personally would not like the thought of owing anybody that type of money on todays economy. HTH
X2... I also wouldn't buy another car if I didn't have the CASH to do it.. this may be old age speaking
I hear you
With old age, comes wisdom:biggrin:
X2... I also wouldn't buy another car if I didn't have the CASH to do it.. this may be old age speaking
With old age, comes wisdom:biggrin:
Payment
My wife paid over 1,000.00 last month alone. As for the principal it was all principal. I hate owing, I have been owing way to long and I am ready to get it over with. I would love to not have any car payments, house payments, credit card debt etc. I can hardly imagine what that is like.
Thanks for the advice Gary. :biggrin:
My wife paid over 1,000.00 last month alone. As for the principal it was all principal. I hate owing, I have been owing way to long and I am ready to get it over with. I would love to not have any car payments, house payments, credit card debt etc. I can hardly imagine what that is like.
Thanks for the advice Gary. :biggrin:
Just be careful being debt free. Being debt free is not a good thing to a point.
I finish paying off a car loan (I bought the vehicle) and waited 2 years before applying for another car loan to buy my current GN. Within those two years, I paid off my CC debt. I also had gas company and department store CCs which I paid off when the statement came. I had these cards so I didn't have to carry cash with and I limited my spending to what I can pay off right away.
So I applied for the car loan with the same bank that I had my first loan from. Well I was DENIED . I asked why and they bank person told me "That I an undetermined amount of debt"??????? I asked what that meant???? She told me that I had no debts and I pay everything off. Needless to say, I closed my account at that bank.
I still pay my CC off right away but I have a home equity line of credit. The interest is lower than my CC and I can write it off. I keep a savings account that I don't touch, (no ATM card linked to it) that is used for back up for my CC/line of credit just in case I can't make payment.
Bily T.
gnxtc2@aol.com
I finish paying off a car loan (I bought the vehicle) and waited 2 years before applying for another car loan to buy my current GN. Within those two years, I paid off my CC debt. I also had gas company and department store CCs which I paid off when the statement came. I had these cards so I didn't have to carry cash with and I limited my spending to what I can pay off right away.
So I applied for the car loan with the same bank that I had my first loan from. Well I was DENIED
. I asked why and they bank person told me "That I an undetermined amount of debt"??????? I asked what that meant???? She told me that I had no debts and I pay everything off. Needless to say, I closed my account at that bank. I still pay my CC off right away but I have a home equity line of credit. The interest is lower than my CC and I can write it off
. I keep a savings account that I don't touch, (no ATM card linked to it) that is used for back up for my CC/line of credit just in case I can't make payment.Bily T.
gnxtc2@aol.com
I agree. I like to have a little bit of a rainy day fund. My wife and I have been through 3 lay offs in the last 5 years, so that has changed our perspective quite a bit.
BLACK6PACK
1 sec reaction King
- Joined
- May 24, 2001
I'd pay a large chunck of it, and keep a little cash handy for a rainy day.
I have good credit, and hear what gnxtc2 is saying, but I wouldn't worry about that. I haven't used a credit card in over 6 years. I paid cash for my '06 gto, and have no car payments. Haven't had a car payment since the late 90s. All my bills are automatically deducted from my bank account, so I have no late bills either. I own a house, and that is the only debt I have. If I don't have the cash for something, I don't buy it. I'm in my mid 30s, so don't think i'm an old fart that has had a long time to get set up this way.
I have good credit, and hear what gnxtc2 is saying, but I wouldn't worry about that. I haven't used a credit card in over 6 years. I paid cash for my '06 gto, and have no car payments. Haven't had a car payment since the late 90s. All my bills are automatically deducted from my bank account, so I have no late bills either. I own a house, and that is the only debt I have. If I don't have the cash for something, I don't buy it. I'm in my mid 30s, so don't think i'm an old fart that has had a long time to get set up this way.
Another thumbs up for Dave Ramsey
I think I have carried short term debt since I was 22. I just turned 45, and have finally gotten a clue. Dave Ramsey is the man! Look him up online Real Debt Help - Get out of debt with Dave Ramsey's Total Money Makeover Plan. or on the Fox Business Channel. His principles are solid, and his "in your face" style is right on the money, so to speak.
I have paid off 30K in the past two years, with 10K left to go. It is tough, but well worth it.
I think I have carried short term debt since I was 22. I just turned 45, and have finally gotten a clue. Dave Ramsey is the man! Look him up online Real Debt Help - Get out of debt with Dave Ramsey's Total Money Makeover Plan. or on the Fox Business Channel. His principles are solid, and his "in your face" style is right on the money, so to speak.
I have paid off 30K in the past two years, with 10K left to go. It is tough, but well worth it.
John Larkin
Sublime Master of Turbology
- Joined
- May 25, 2001
If you can, continue paying $1K per month, you only have 2.5 years to go.
If you feel like you're on the bubble or just feel more comfortable with a good bit of cash available, keep alot of the savings short term so you can get to it. Regular savings is paying as little as 0.25% APY; that's right: 1/4 of a cent per dollar annually - $4 a year earns you a penny - $20,000 earns $50. A 30-day CD pays about 1.8% APY and your money is only tied up for one month. 9 month CDs pay about 3% APY. There is little risk involved, it's FDIC. You could put $20,000 in the 30 day CDs and get $360 over the next year if you roll them back to back or go with the 9 month and get $450 (12 months = $600 but the CD terminates every 9 months). There is a penalty on CDs for early withdrawal so be prepared to commit. As the bank for details; usually it is 25% to 50% of the interest you would have earned if the CD went full term.
If you did 3 back-to-back 9 month CDs, you'd earn almost 1.5 payments over the next 27 months but yes you'd pay tax on those earnings ($1350). If you did 30 day CDs over 27 months, you'd almost earn a payment ($810) but you could continue for 3 more months since they renew each month ($900 total). If peace of mind for $450 ($15 per month) less earnings over 30 months is worth it to you to be liquid monthly, then go with the 30-day CDs. This does not qualify me as a guru FYI.
If you feel like you're on the bubble or just feel more comfortable with a good bit of cash available, keep alot of the savings short term so you can get to it. Regular savings is paying as little as 0.25% APY; that's right: 1/4 of a cent per dollar annually - $4 a year earns you a penny - $20,000 earns $50. A 30-day CD pays about 1.8% APY and your money is only tied up for one month. 9 month CDs pay about 3% APY. There is little risk involved, it's FDIC. You could put $20,000 in the 30 day CDs and get $360 over the next year if you roll them back to back or go with the 9 month and get $450 (12 months = $600 but the CD terminates every 9 months). There is a penalty on CDs for early withdrawal so be prepared to commit. As the bank for details; usually it is 25% to 50% of the interest you would have earned if the CD went full term.
If you did 3 back-to-back 9 month CDs, you'd earn almost 1.5 payments over the next 27 months but yes you'd pay tax on those earnings ($1350). If you did 30 day CDs over 27 months, you'd almost earn a payment ($810) but you could continue for 3 more months since they renew each month ($900 total). If peace of mind for $450 ($15 per month) less earnings over 30 months is worth it to you to be liquid monthly, then go with the 30-day CDs. This does not qualify me as a guru FYI.
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