Credit card debt ugh

**MYOM** · 10-24-2008, 08:16 PM

Why would you want to pay interest to borrow your own money? Are you saying that once you pay the loan off with the insurance proceeds, you might not be able to save $30,000? Well, if you can’t save $30,000, how would you be able to make the payments on your $30,000 loan? There is no get out of jail free card here. The credit cards have to be paid in monthly installments or in a lump sum. I vote for the lump sum and then start with a clean slate. What is the interest rate on the $40,000 account? I’ll bet it is a whole lot less than what the banks are charging on those credit cards.

I vote to pay the credit cards in full and start saving. Oh, and one more thing, cut up some of those credit cards. You are right about one thing. Debt is forms of financial cancer so get rid of it while you can.

Dan Clemons retired Certified Financial Planner

**kork13** · 10-24-2008, 08:34 PM

I agree completely with MYOM above--your best option by far is to use the cash you have and pay it off immediately. I know you would probably prefer to use your mother's policy money for something more ... significant, but really, it's in your best interest to get out from under that debt. Once you've done that, you can move forward from there.

Is your wife working at all? I hope that if she's accumulated $30k of hidden debt, she must have some way to help in covering the debts?

Cancel all, or most of those cards she has, and stick with just one or two that you both can use responsibly. If you're afraid something like this might happen again (not to suggest you should be distrusting, but simply to prevent problems in the future), check both your's and your wife's credit reports every few months with http://www.annualcreditreport.com. If you get a report from one agency every four months, you can keep an eye on what credit accounts are open in both of your names, because they will list any and all open or recent accounts. Doing that is also good for protecting your identity.

**disgruntable** · 10-24-2008, 11:48 PM

You do not really have many options. Based on the facts you stated, your best bet would be to use the $40,000 to pay off the credit card debt.

Does your wife have the spending under control now?

**maat55** · 10-25-2008, 04:43 AM

Pay them off and be done with it. But you have some serious issues to address with your spending and budgetting. Hidden CC's is a trust issue. You should have known this was going on yourself.

You are going to have to take the steps to prevent this from happening again the way you should have, before.

**kissvid** · 10-25-2008, 08:17 AM

Thank you all for the advice. My wife has it under control and last night cut up every card infront o fme. It's was like a bowl of confetti. Let me ask you all something. I don't wna tto touch that money. I know I have to but I want to try not too. Now..Iam not a great saver. ok but not great. Would it make sense to xfer some balances to let's say some 0%apr and pay them off slowly. Like...pay 20,000 off and xfer 10,000 to 0apr so that I can pay them off slowly and still have that money in the bank? I am just trying to not use it although i know i have to. I even tries thinking of a way to use the interest only that is earned to make a payment. Will that help?

Marc

**kork13** · 10-25-2008, 10:06 AM

hmmm..... you can put some of it into high-yield (long term) CDs, which could throw off some (not alot) of interest that you could put to the debt. $15k in a 4.5% CD (you could probably get that with a 2-4 yr CD), you would get about $55 interest each month, which could be deposited into an account of your choosing. That just has to be specified when you open a CD.

I'm not certain of it, but I think that even with 0% balance transfers, you still have to pay a transfer fee, normally around 3%, though generally capped somewhere between $100-$200. What would be your plan to pay off that remaining $10k? Hopefully before you lose the 0% (normally lasts 6mo-1yr)? Do you have enough income that you could afford to not touch that 2nd $20k and still put $1000/mo toward the CC debt?

It might not be the preferred option, but if you have the income to make it work, your plan could be feasible for you.

**maat55** · 10-25-2008, 01:17 PM

Originally posted by kissvid View Post

Thank you all for the advice. My wife has it under control and last night cut up every card infront o fme. It's was like a bowl of confetti. Let me ask you all something. I don't wna tto touch that money. I know I have to but I want to try not too. Now..Iam not a great saver. ok but not great. Would it make sense to xfer some balances to let's say some 0%apr and pay them off slowly. Like...pay 20,000 off and xfer 10,000 to 0apr so that I can pay them off slowly and still have that money in the bank? I am just trying to not use it although i know i have to. I even tries thinking of a way to use the interest only that is earned to make a payment. Will that help?

Marc

Personally, I would payoff the debt and use every penny you would have paid the debt with and build an EF. You can hang on to the 10k card for an extreme emergency if needed. Simpler is better.

The interest on your money will not payoff the CC's. Bite the bullet and be done with it.

**MYOM** · 10-25-2008, 02:12 PM

Originally posted by kissvid View Post

Now..Iam not a great saver. ok but not great. Would it make sense to xfer some balances to let's say some 0%apr and pay them off slowly. I am just trying to not use it although i know i have to. I even tried thinking of a way to use the interest only that is earned to make a payment. Will that help?

Marc

No Marc, that will not help. The fact you are willing to admit that you are not a good saver is the very reason you should pay off all that credit card debt. If you can’t live on less than you make then you will become a financial failure. If paying yourself first does not sound like a good idea then you won’t be one of the 18 in 100 at age 65 that is able to retire. You will be in the group of 66 over the age of 65 that is still working or living off relatives, friends, or charity. How important is it for you to go visit your kids and not have to stay?

Marc, you need a Path to Prosperity, The first step along that path is to become debt free period.

Good Luck!

Dan Clemons

**JeanneElle** · 10-26-2008, 07:55 AM

Originally posted by MYOM View Post

I vote to pay the credit cards in full and start saving. Oh, and one more thing, cut up some of those credit cards. You are right about one thing. Debt is forms of financial cancer so get rid of it while you can.

Dan Clemons retired Certified Financial Planner

I agree with that one for sure. You're lucky to have the cash to pay them all off - I'd do that. The important thing is though, once this is done, get rid of the cards...

**buzz** · 10-26-2008, 04:11 PM

1. Pay off the debt immediately and be done with it.

2. Don't just cut up the cards, cancel the accounts.

3. Opt her out of credit offers and freeze her credit reports.

4. Get her a debit card and let her demonstrate "under control."

If she objects, I'd say she doesn't understand the seriousness of the situation. Good luck!

**Denvergirlie** · 10-26-2008, 06:14 PM

Become debt free, get rid of it. Do not surf it to other cards, you need to just pay it off and be done with it.

With the lack of debt and $10K in the bank you are in a poistion to change your future and your relationship with money.

**Tree0164** · 10-27-2008, 01:35 AM

I would pay off the best but make sure you and your wife handle these issues.

Also if she has 30k of debt she should maybe try to sell some of this stuff she bought. She needs to take some responsibility here for those charges.

I recommend reading Dave Ramsey's book Total Money Makeover

**rizzmo** · 10-27-2008, 07:29 AM

The problem you have here is parting with money. Moving the debt to a 0% CC doesn't address this ... in 6-12 months you will still have to part with the money. The debt should be paid in full. You will not earn more money in savings accounts or cd's than the interest on a CC, plus you will have to pay taxes on the interest you savings or cd earns. You should take the remaining 10k and put that in a money market account or high interest savings account for an EF.

**prosper** · 10-27-2008, 09:28 AM

Originally posted by kissvid View Post

Hello all,

I was searching the net for help and found this forum. I hope you can help me. I won't go into along story but I found my wife's stash of credit cards and needless to say I was pissed. Ok I passed that. We have 30,000 in cc debt. i can't do teh equity thing because the house is down in value. I lost my job 2 years ago and used what was in the 401k to live for the past 2 years. I couldn't fine a new job so I went into business myself and am doing ok. But now it has slowed down alot and I am living off what I have earned from the business. To top this off my mom passed away 6 months ago during all of this, however I have 40,000 from a life insurance policy. So I have 30,000 in debt and 40,000 in this account. My wife wants to pay it all off. I explained i know there has to be a better way. That's where you folks come in. is there a better way?? Is there something different i can do? My wife doesn't want to listen but I know there has to be something. Tell me if this can happen and if it's worth it. what If I went to the bank...got a personal loan for 30,000 and paid off the cards, however I would secure the loan with 30,000 ofthe 40,000 that i have. Then when the loan is paid off I would get my 30,000 back that I secured the loan with. Does that make sense or soudn possible? any help would be greatly appreciated.

Marc

Personally, I think that it is pointless to pay off the debt if the root of the problem has not been solved. I once paid off my brother's credit card only to watch him get another credit card and max it out.

Credit card debt ugh