New answers tagged debt-reduction
0
Yes, mathematically, on average investing in equities in your 401(k) will put you ahead, but unless you can get a full match on the 19% (which is very rare), then the gain isn't life-changing (maybe an extra $5-10k depending on the amount and limit of the match). Plus, if you're young, you still have plenty of time to make up for the lost match, and with no ...
0
If I choose to invest $19k into my 401k and assume the average rate of return of 7%,
And here we go. Assuming a company match for the 19000 your first year investment is an average of 107% (!). Beat that. See, your 19000 get matched with ANOTHER 19000 by the company and THEN you make 7% (also on the match? not sure). Also there is this thing about pre and ...
6
What would make investing into my 401k the better option other than NW?
Company match. Eliminating all 401(k) contribs means no company match, and that's a pay cut, which naturally is Unwise.
More important is the foolishly binary thinking embedded in your statement:
If I choose to invest $19k into my 401k
Who mandates that you must fully contribute ...
0
Credit card debt is typically unsecured. Does your prospective personal loan require any sort of collateral? If something in your plan goes wrong and you end up facing bankruptcy, the credit card debt could be wiped out, while secured debt would have the collateral taken. Depending on exact circumstances, the personal loan may also end up with other reasons ...
4
The one thing I would be cautious about is being sure that you are actually approved for a loan on those terms, by a reputable bank.
Your phrasing makes me wonder if you got a letter in the mail saying "you're approved for a personal loan . . ." If so, look into the sender more (a lot more). A lot of them are highly deceptive, and are looking to trick you ...
6
It's been mentioned, but I want to reiterate, that if you can, try to get the term loan from a bank that has no fees (origination, termination, possibly even late fees though I presume you'll never be paying late). The reason is I predict within 6-12 months of paying off some or all of your CCs, you will be offered a balance transfer with a very low APR and ...
4
opportunity cost, origination fees and pre-payment penalties
reputable banks don't generally charge a loan origination fee or pre-payment penalty for a personal loan, but it's worth double-checking. you should be able to find a document or request a response positively confirming that they don't charge either of those.
depending on your credit score and ...
1
Assume you are living in the USA, the current(2019) average mortgage rate is 3.99%.
Depends on the repayment period of the 8% personal loan, if it stretches more than 5 years, you should think about re-finance your property mortgage and take advantage of the lower interest rate.
You should get quotes of re-finance interest rates after adding 40k. Add the ...
9
There's not a good reason against it. The main benefit is that your APR goes from 19% to 8%. Not bad! The major risks are all covered in your extensive list.
After you take the loan, you should pay it all towards the credit card, leaving 10k in CC debt. Forget about the loan (besides min. payments) until you finish off that 10k. Then pay back the loan.
...
30
My reading of:
We have been working hard to pay off this debt and have been moving in the right direction.
is that you are currently able to cover more the minimum payments on your cards/loans: you are whittling away at the total debt, but it's a slow process. Taken together with:
The minimum monthly payment on the loan is lower than the combined ...
20
Anything I'm missing or should look out for?
Yes, what was the reason you got into 40K CC debt in the first place?
If the reason is "you couldn't help it" then a loan won't solve your problem.
-3
Its always good to pay pay off higher-interest debt with lower-interest debt.
Anything I'm missing or should look out for? - Have good amount of emergency funds.
-6
I would not recommend it.
The 30k is not enough to rid yourself of the CC debt, and you are not addressing your primary issue. This problem is one of overspending that is cleverly disguised as an interest rate problem. As such, if you do this debt consolidation, you will likely find yourself in 30K personal loan debt plus at least 40K in cc debt, plus ...
130
Should I take out a personal loan to pay off credit card debt?
Yes. 8% is much lower than 18%, so you'll save money.
Anything I'm missing or should look out for?
You might be missing the reason you're $40K in CC debt. We were $30K in CC debt because we didn't know where our money went.
Knowing that -- and strictly sticking to a budget while deep in ...
0
The main questions are:
What's your interest rate (both before and after) ?
Are you going to invest the money you save ?
You're saying time to pay off closing costs is 4 years, but what does that mean ? Does that mean that it'll take you 4 years to get back to the same principal amount that you have now ? In that case it doesn't seem like it's worth it. ...
2
4 years seems a little high for a break-even point. One rule of thumb I've seen is that you should refinance if you can reduce your rate by 1% or more. I assume you're rolling your closing costs into the new mortgage, which increases your principle and raises your payment, lessening the improvement.
If you can afford to pay $2,100 per month, then look at ...
0
Is your goal to eliminate credit card interest and fees forever? It should be.
A few things to consider:
Call and ask each of them for a lower rate.
You can also ask for a payment plan at a lower rate.
Withdrawal from a 401k/403b will incur a 10% penalty + payment of income tax. Consider that when figuring out amounts.
Stop using both cards ...
1
In case you don't want to touch the 401k or the savings:
I would get a 0% introductory APR credit card (like the one you mentioned, 21 months is a long time).
Then I would use that credit card for all spending that you can put on a credit card.
While making the biggest possible payments to credit card 2 until it's paid off. You say you have an emergency ...
2
I have about $14k in a 403(b) from a previous job and $4400 in my 401k
at my current job.
I'd transfer the 403(b) balance to my 401(k). Reduce the 401(k) deposits to the level that's matched. If a loan doesn't keep you from getting matched deposits, borrow $9000*. Pay the cards in full. Make the regular 401(k) payments, but also replenish the savings with ...
-3
I have been in a situation with credit card debt - unemployment led to a large amount of high interest debt.
If it was me:
1. Take advantage of your high credit score. Get a Zero interest balance transfer card and move as much as you can to that new home. Make payments on time.
2. Utilize a loan from your 401k (you can borrow from yourself, the vested ...
11
CC2 is costing you about $70 per month in interest. It seems a waste to keep that much cash in the bank when you're spending money on interest like this.
First of all, I would make sure that I have my budget under control and am not creating any more debt. Then I would knock out CC2 today. That still leaves you about $4k for "emergencies", and there aren't ...
Top 50 recent answers are included
