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Consolidate debt or pay it off using some of my 401k?
Posted on 10/19/17 at 8:24 am
Posted on 10/19/17 at 8:24 am
This may be a silly question but hear me out:
I have about $14,000 in credit card debt due to a few things over the years (fixing up my old car when it broke down, paying for a semester or summer term, flights on southwest CC when i was with someone in cali). Since then, i've stopped using my cards altogether and just pay on them. They all have fee's and interest now so i'm stuck with that so i try to pay over the limit. Collectively thats about $400 a month.
I'm a 5-year engineer making roughly $76-80k depending on the workload throughout the year. Roughly bring in about $1.8k-2k a check. $1000 goes to rent (solo living), $50 elec, $130 cable (basic package doesn't get me basic channels or espn
). Aside from that, other expenses are about $100+ for groceries and nic-nac stuff.
I've considered consolidating my debt and paying on it that way. I've done on the surface research but would like for other opinions on the matter. Second option is taking out of my 401k (loan against myself in a way) and paying it off. I've racked up at least $60k thus far in 5 years using what i know about investing and companies with long term yields for the bigger bucks in the end.
Any thoughts would be much appreciated. Sorry so long
I have about $14,000 in credit card debt due to a few things over the years (fixing up my old car when it broke down, paying for a semester or summer term, flights on southwest CC when i was with someone in cali). Since then, i've stopped using my cards altogether and just pay on them. They all have fee's and interest now so i'm stuck with that so i try to pay over the limit. Collectively thats about $400 a month.
I'm a 5-year engineer making roughly $76-80k depending on the workload throughout the year. Roughly bring in about $1.8k-2k a check. $1000 goes to rent (solo living), $50 elec, $130 cable (basic package doesn't get me basic channels or espn
). Aside from that, other expenses are about $100+ for groceries and nic-nac stuff. I've considered consolidating my debt and paying on it that way. I've done on the surface research but would like for other opinions on the matter. Second option is taking out of my 401k (loan against myself in a way) and paying it off. I've racked up at least $60k thus far in 5 years using what i know about investing and companies with long term yields for the bigger bucks in the end.
Any thoughts would be much appreciated. Sorry so long
6
Posted on 10/19/17 at 8:36 am to FieldMink
Check out 0% Credit Cards that allow $0 transfer fees
Posted on 10/19/17 at 8:45 am to FieldMink
quote:
I'm a 5-year engineer making roughly $76-80k depending on the workload throughout the year. Roughly bring in about $1.8k-2k a check.
.... You paid weekly?
quote:
Consolidate debt or pay it off using some of my 401k?
Short answer is to look for things like 0-low fee transfer credit cards
This post was edited on 10/19/17 at 8:46 am
Posted on 10/19/17 at 8:46 am to GenesChin
Every two weeks. Heck if i was paid that much weekly i never would've made this post lol. Would easily pay my debt
Posted on 10/19/17 at 8:48 am to GenesChin
Also, can you help me understand what a 0%-low fee transfer balance is? I see chase offers it however i already have two credit card via chase: Slate and Southwest. How would that work?
Posted on 10/19/17 at 8:55 am to FieldMink
quote:
Also, can you help me understand what a 0%-low fee transfer balance is? I see chase offers it however i already have two credit card via chase: Slate and Southwest. How would that work?
Sounds like your best option. Basically, credit cards will offer you 0% interest for a period of time usually 12mo; and they allow you to transfer balances from other cards to it. Some charge a one time fee based on the amt transferred, some waive all fees. I have seen people go years without paying a cent of interest by constantly flipping balances to new offers. It takes discipline and planning but it can be done.
This post was edited on 10/19/17 at 8:56 am
Posted on 10/19/17 at 8:59 am to ODP
quote:
I have seen people go years without paying a cent of interest by constantly flipping balances to new offers. It takes discipline and planning but it can be done.
*Waves hand*
It's how I cleared my cc debt in 2 years after college.
Chase and Citi have 18 and 22 month cards.
Posted on 10/19/17 at 9:11 am to FieldMink
While Bank of America is the worst they have the card you are looking for.
0% APr for 18 months and 0 transfer fee
0% APr for 18 months and 0 transfer fee
Posted on 10/19/17 at 9:11 am to ODP
Ah, i got you. In a way, transferring that balance to another card, being able to make payments minus the interest. When 12 months are up repeating the step again.
Posted on 10/19/17 at 9:14 am to FieldMink
Just be aware you won't be able to transfer balances from the same institution.
Example: Chase CC cannot be transferred to another Chase CC.
Example: Chase CC cannot be transferred to another Chase CC.
Posted on 10/19/17 at 9:24 am to TigerCruise
Makes sense. So best case scenario is transferring to another CC from another company (capital one or such)? I currently have two with Chase and one with discover.
Posted on 10/19/17 at 9:31 am to FieldMink
quote:
Makes sense. So best case scenario is transferring to another CC from another company (capital one or such)? I currently have two with Chase and one with discover.
Yes, and a lot times you will not have to apply for a new card, instead check the offers on the cards you already have and see if they can help you out. You may only need 2/3 cards total to do all the debt management.
Posted on 10/19/17 at 4:56 pm to ODP
Set your priorities and buckle down and pay off your debts. Don't ever borrow against your 401K. Horrible option. Spend 10 bucks and get Dave Ramsey's The Total Money Makeover. Easy read and will save YOU tons.
Posted on 10/19/17 at 9:06 pm to FieldMink
Do not use your 401k
Posted on 10/19/17 at 10:41 pm to CorkSoaker
You should be able to pay off the debt in about 6 months with your salary and small amount of monthly expenses. But I agree with others about transferring the debt to another card
Posted on 10/19/17 at 11:35 pm to FieldMink
Don't touch the 401(k).
1. Dispute the charges/debt if you still have time.
2.If 1 is a no-go, call them and work out a deal. Tell them you experiencing dire financial hardship and have spoken with an attorney and Ch.7 is your only resort. Seeing as they wouldn't get jack shite if that were true, they'll make an offer.
1. Dispute the charges/debt if you still have time.
2.If 1 is a no-go, call them and work out a deal. Tell them you experiencing dire financial hardship and have spoken with an attorney and Ch.7 is your only resort. Seeing as they wouldn't get jack shite if that were true, they'll make an offer.
Posted on 10/20/17 at 6:41 am to Grandioso
quote:
1. Dispute the charges/debt if you still have time.
Why? They are his legitimate debts.
quote:
2.If 1 is a no-go, call them and work out a deal. Tell them you experiencing dire financial hardship and have spoken with an attorney and Ch.7 is your only resort. Seeing as they wouldn't get jack shite if that were true, they'll make an offer.
In that scenario he would be trading his (relatively small) CC debt for a torpedoed credit score. Depending on his short term financial goals, that might not be worth it. Plus, he definitely has the income to pay it off in full in less than a year.
My position on debt might not be the most popular, but if you charged all that shite up, it's only right for you to pay it back. Don't lie and tell them you can't afford it - that's just laziness.
Posted on 10/20/17 at 12:16 pm to FieldMink
quote:
transferring that balance to another card, being able to make payments minus the interest. When 12 months are up repeating the step again.
Pretty much. FWIW zero rate cards may or may not be around much longer if rates continue to go up but you should be able to get the rate down to something that's really low at least.
But the basic idea is the same. Transfer as much as possible to the low-rate card. If you have any left on the higher rate cards, then pay the absolute minimum required on the low rate card while you attack the high rate one as hard as possible.
Posted on 10/20/17 at 12:17 pm to Grandioso
quote:
1. Dispute the charges/debt if you still have time.
2.If 1 is a no-go, call them and work out a deal. Tell them you experiencing dire financial hardship and have spoken with an attorney and Ch.7 is your only resort. Seeing as they wouldn't get jack shite if that were true, they'll make an offer.
Um, the OP didn't indicate that he's dealing with collections. They're just outstanding CC debts is all.
Posted on 10/20/17 at 12:31 pm to foshizzle
Keep your 401k intact
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