Hey Reddit, long time lurker, occasional poster, using a throwaway for anonymity (nobody wants to accidentally some day be the next Ken Bone and have their dirty laundry aired).
My fiance and I bought a house three months ago and during the process of selling my own place over the last two years, I unfortunately fell into the trap of trying to keep cash on hand for the 20% down payment on the $210k house without cutting back my spending, and living above my means. I knew I had the option of putting 20% down on the house or paying off my mounting debt, but I opted to avoid paying PMI on the house. Long story short, I racked up just north of $20k in credit card debt over three cards. I have started by taking the credit cards out of my wallet and removed them from all of online shopping sites where they had previously been saved. The only exception to this is my card that gives 5% cash back for gas/groceries, which I use to charge them and before I even leave the store I submit an online payment for however much money I just spent. I'm trying to devise the best way to consolidate these payments into something more manageable, where interest isn't destroying me.
Credit Cards:
- Barclay $9,719 - 21.24% - $276/month
- Discover $9,805 - 20.24% - $280/month
- Chase $2,785 - 13.49% - $75/month
Other monthly expenses:
- $261 car payment - 1.75% interest. I'm putting this car up for sale within the next month; I was given an old Honda by my father with 400k miles that runs like a top and is completely paid off. I'll also save around $20-30 extra per month by not owing insurance on this car.
- $1000 mortgage - 3.75% interest (includes taxes & insurance)
- $70 refrigerator payment - 0% interest. Have 33 months left on 0% interest financing and it will be paid off by the deadline
- $440 student loan - 6.75% interest. This just went up by nearly $100/month and I'm considering asking them to lower it again if possible
- $60 Internet & Netflix. No cable
- $45 cell phone
My income & assets
- $1731.55 net bi-weekly (just got a raise with an extra $78/check, which I plan to put straight to debt payments)
- $4800 in cash
- $7000 Roth IRA
- Credit score is 715 currently
In addition, we have a finished third floor in our home that we will be renting out come January, which should bring in around $750/month, all of which will go toward paying debt down. My fiance is in law school, thankfully on scholarship, but she does not have any income at this time and is not permitted to work during her first year of school. She helps out with bills here and there with some money she's saved. I should also mention, her parents are taking care of paying for our wedding next year, so while I will still have some small expenses for that, the lion's share of it will not be on us. My job still offers a pension program (government employee) so I am still contributing to retirement savings, though not as much as I would like to be able to afford.
Options (so far)
- My credit union offered me a five year, unsecured loan of $10,000 at 10.49% APR. The monthly payments would be $231, but I could pay extra once the other high interest credit card was paid off. There is a negligible $50 penalty if I pay it off before 2 1/2 years have passed.
- Lightstream offers 8.29% - 13.79% interest loans in the dollar amount that I'm looking at, plus no origination fee. This is a fixed term, 60 month loan with no early payment penalty. I meet the requirements for a loan from them, but have not formally applied yet.
I know it's a risky venture taking more loans to pay off credit cards, but we have changed our thinking about money and are ready to take control of our finances, living more frugally and hammering away at this debt. What can I do to get my money right, Reddit? The interest rates on the two bigger credit cards are killing me.
Thank you!
Submitted November 08, 2016 at 03:18AM by lionfinance http://ift.tt/2fUZFPJ personalfinance
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