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Started By
Message
Need the MBs help on debt situation
Posted on 5/22/19 at 8:14 pm
Posted on 5/22/19 at 8:14 pm
Have worked myself into a unfortunate debt situation and would appreciate any help on first steps now that I have money finally coming in again....
I was fortunate after college to make 150-300k/year in sales for 4-5 years. Following I moved to a different city and basically started my business over agin making less than 10k total for 2 years outside of some rental income from a home I own. I also spent a little much being used to my old income and supported a family member, and got engaged with most of my saved cash.
Through years of making money and always paying off balances on ccs i worked up to a 100k+ credit limit. Most of my expenses went on cards for 2 years including getting married (no pics).
Luckily I have worked my way to producing again and should be in the $150-$300k range this year. But I have been and continue to be eaten alive by cc interest. I get paid when I get paid so it’s not consistent.
My situation:
Cash averages about $1000 last few months after expenses (most lean I have been since college)l with about 20-30k in closed deals accounts receivable the next 30-60 days and finally a good pipeline for rest of the year.
Rental House 2k/month gross income and $900 mortgage about 50-60k equity.. long term tenant
About 80k in cc debt 2 with 30k and 3 with 3000-8000k never missed a payment in life. (I have been making enough to put the cards away for the last 5 months.)
Have close to 100k in ira/401k
Credit has taken a big hit with debt so close to limit so it makes it tough to get a loan right off the bat.
What should my first moves be to accelerate this process? Should I keep the house, sell it, use for HELOC? What cards to attack first? Is it worth negotiating payoffs or keep paying and just take out chunks at a time?
Any words of advice from people who have been here and dug out? It keeps me up at night, but I know I can make this happen and be a (smart) OT baller again...
I was fortunate after college to make 150-300k/year in sales for 4-5 years. Following I moved to a different city and basically started my business over agin making less than 10k total for 2 years outside of some rental income from a home I own. I also spent a little much being used to my old income and supported a family member, and got engaged with most of my saved cash.
Through years of making money and always paying off balances on ccs i worked up to a 100k+ credit limit. Most of my expenses went on cards for 2 years including getting married (no pics).
Luckily I have worked my way to producing again and should be in the $150-$300k range this year. But I have been and continue to be eaten alive by cc interest. I get paid when I get paid so it’s not consistent.
My situation:
Cash averages about $1000 last few months after expenses (most lean I have been since college)l with about 20-30k in closed deals accounts receivable the next 30-60 days and finally a good pipeline for rest of the year.
Rental House 2k/month gross income and $900 mortgage about 50-60k equity.. long term tenant
About 80k in cc debt 2 with 30k and 3 with 3000-8000k never missed a payment in life. (I have been making enough to put the cards away for the last 5 months.)
Have close to 100k in ira/401k
Credit has taken a big hit with debt so close to limit so it makes it tough to get a loan right off the bat.
What should my first moves be to accelerate this process? Should I keep the house, sell it, use for HELOC? What cards to attack first? Is it worth negotiating payoffs or keep paying and just take out chunks at a time?
Any words of advice from people who have been here and dug out? It keeps me up at night, but I know I can make this happen and be a (smart) OT baller again...
10
Posted on 5/22/19 at 8:20 pm to rusty tiger88
Also should add I am under 30
Posted on 5/22/19 at 8:35 pm to rusty tiger88
If I’m following all of that it sounds like you are saying you have the cash flow to knock out the credit card debt within 6-9 months if you really have put the cards away.
Just pound it out
Just pound it out
Posted on 5/22/19 at 8:56 pm to rusty tiger88
Woof, this sounds like the beginning of every Dave Ramsay call in show. I'd talk with a CPA about selling the rental. Not sure what you'll have to pay in taxes, but it's not some huge cash cow for you right now and its would be nice to knock down your debt by 50%
Posted on 5/22/19 at 9:51 pm to rusty tiger88
You’re probably netting around $500/month with the rental after vacancy, capex, maintenance?
Posted on 5/22/19 at 10:23 pm to jimbeam
On the house It ends up being about 600-800/month net. It was nice when I had no cash flow for a couple years.
Posted on 5/22/19 at 10:24 pm to Mr.Perfect
I sure hope so. The pipeline I have would most likely achieve in that time. Could always fall apart or grow though.
Just tough on the leaner months getting even a small amount of cash savings wiped out from inconsistent income.
Just tough on the leaner months getting even a small amount of cash savings wiped out from inconsistent income.
Posted on 5/23/19 at 9:16 am to rusty tiger88
Sell the rental. Use as much of your upcoming income as you can to knock out debt.
If you have cc debt left, and you are disciplined enough, look into a good card for balance transfers. Could give you another 18 months interest free to help you pay it.
May not be the best solution, but it is viable.
If you have cc debt left, and you are disciplined enough, look into a good card for balance transfers. Could give you another 18 months interest free to help you pay it.
May not be the best solution, but it is viable.
This post was edited on 5/23/19 at 9:39 am
Posted on 5/23/19 at 9:19 am to rusty tiger88
Sell the rental. It will be one less thing to worry about, and you can cut your debt load by half with the proceeds. Less debt means less stress & more flexibility.
Posted on 5/23/19 at 12:05 pm to rusty tiger88
I think you are playing with fire with that rental. if you can sell it and knock out half your debt right away, that would be great.
Before you start throwing cash at the debt, considering that you are at least making the min, I would stash away at least 10K or so into an easy to access savings account, so you have something to turn to in those lean months when you are waiting on a commission check.
And then start attacking the remaining debt.
Doing a settlement is going to blow up your credit score, so it just depends on how bad it is now, what the hit would be.
Key for someone like you is trying to find a way to average your life when it comes to income. In months where your income is above average, save it. When it's below average, you have the savings to tide you through.
Before you start throwing cash at the debt, considering that you are at least making the min, I would stash away at least 10K or so into an easy to access savings account, so you have something to turn to in those lean months when you are waiting on a commission check.
And then start attacking the remaining debt.
Doing a settlement is going to blow up your credit score, so it just depends on how bad it is now, what the hit would be.
Key for someone like you is trying to find a way to average your life when it comes to income. In months where your income is above average, save it. When it's below average, you have the savings to tide you through.
Posted on 5/23/19 at 12:24 pm to rusty tiger88
Sell the rental and pay off the remaining $20-$30k of CC debt when those AR's come in the next 60 days. You'll be debt free before August.
Posted on 5/23/19 at 1:10 pm to rusty tiger88
If you didn't own the rental would you use the credit cards to purchase it?
If you really want that particular rental property find other ways to accelerate paying off credit cards. Otherwise sell it and save to buy a rental later when you're more financially stable w less risk.
If you really want that particular rental property find other ways to accelerate paying off credit cards. Otherwise sell it and save to buy a rental later when you're more financially stable w less risk.
Posted on 5/23/19 at 1:12 pm to hungryone
quote:
Sell the rental
This.
Assuming the CC interest rates are some >15-20%, very hard to believe that the rental makes a higher rate of return than selling + paying of credit cards
Posted on 5/24/19 at 4:10 pm to rusty tiger88
First. Lay off the cocaine. Geez dude. Second, suppress your fixed cost to a minimum. Throw everything else at the debt. Don't worry about saving in your retirement fund.
Posted on 5/24/19 at 5:21 pm to LSUFanHouston
quote:
Before you start throwing cash at the debt, considering that you are at least making the min, I would stash away at least 10K or so into an easy to access savings account, so you have something to turn to in those lean months when you are waiting on a commission check.
IMO there isn't any real functional reason to do this.
If he pays the CC down by 10k and hits lean times, he'll just charge up the CCs by 10k.
If he keeps the 10k in savings, his CC balances will be 10k higher.
Since savings accounts pay 2.25% and CC interest is way higher, he's better off paying the CC than putting it into savings.
This post was edited on 5/24/19 at 5:23 pm
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