Kingssman
Gold
Reged: 05/09/08
Posts: 122
Loc: Peoria Illinois
|
|
Crazy question for all those out there dealing with finances and divorce. I'll be getting $7500 from my ex as payment for buying all the photography equipment.
I have 2 options.
1: pay off every credit card and personal loan
2: knock down that $15,000 home equity loan where all the business debt came from in the first place.
Now home equity is at lower interest than my credit cards and the min payment to all the cards = the total amount I pay to the equity line.
since for some reason my situation is so 50/50, should I kill off the equity line so the house can sell better or kill off the credit cards and simplify the outgoing finances, not to mention not get raped by the interest rates.
It would be nice only having 2 debt payments in the entire month to worry about instead of having 1-2 cards mailed out every week.
|
malone
Platinum
Reged: 12/30/07
Posts: 1865
|
|
If you're willing to 'close' the cards altogether after paying them off, then do so. But it's really easy to pay off card debt with lump sums and then start using them and be back to square one.
It's why debt consolidation of card debt often doesn't work. People consolidate their card debts into a personal loan and then start new card debts, actually increasing what they owe instead of owing less.
Unless you close the cards and that credit line, I'd pay it off the home loan. It's more permanent and untouchable.
|
kent
Platinum
Reged: 06/13/07
Posts: 2967
Loc: a melted glacier
|
|
I would pay off the credit cards (interest is a b!t@h), BUT you need to make sure that you set yourself up in your spending habits in a such a manner that you PAY THEM OFF each month.
Then it is a 0% floated loan in your favor. Once you let it slide to another month .... then they have you.
If you can not (by habit or design) pay your credit cards off each month ... CUT THEM UP and CLOSE the account.
So -- pay of the credit cards. THEN ... take what was about 1/2 or more of that monthly payment and toss it at the line of credit each month. The increased payoff with reduce the time of the loan, AND the damage that interest does to your long term economic security.
When paying off debt, you want to pay off the one that builds into more debt, AND make changes that prevent the same situation from returning.
After the line of credit is paid off, then you do the same thing to pay off the primary mortgage. Get it down faster than the agreed terms. Reduce the pain of interest. Take any extra money (tax returns, bonus checks, etc.) and toss 1/2 to pay down debt. Interest IS NOT your friend.
--------------------
Today you are You, that is truer than true. There is no one alive who is Youer than You.
Dr. Seuss
|
germangirl631
Platinum
Reged: 04/04/08
Posts: 875
Loc: NJ
|
|
Malone has a good point about running up credit cards after paying them off, but I still would pay those off first. Then, You could take what would have been the credit card payment money each month (or 1/2 of it) and put it towards the equity loan. I just hate paying high interest, and they then charge you interest on the interest! It's a scam in my opinion.
You'll feel good about having less bills to pay each month. It make life simpler. it's freeing.
|
boobaby
Platinum
Reged: 05/01/07
Posts: 296
Loc: mass
|
|
Definately pay off the credit cards first. Take the one with the highest interest rate and pay that first, then the next highest one, and so forth. Take the money you normally would have put towards your credit card payments and put towards your home equity loan. Also, either cut up all your cards, except one for emergencies. I have also heard of freezing them in ice so you are not as tempted to use them. Don't know if that would work for me, as the ice pick would be calling my name.
|
stoltz
Platinum
Reged: 01/29/07
Posts: 1478
Loc: Texas
|
|
It all depends on your personal endeavors. If it were me, I'd try to find an investment vehicle that has an "ROI > debt payments" each month, and park it there.
|
malone
Platinum
Reged: 12/30/07
Posts: 1865
|
|
I really like what Kent and GG are saying, but close off the credit line. Don't let yourself be tempted to use them again.
|
ATVILLAS
Platinum
Reged: 05/12/07
Posts: 2284
Loc: Lost in the post D maze!!
|
|
I woul pay off all the cards and cancel all but but one. Try and keep one that gives cash rewards and use it a lot but be sure to keep the money you would have used in the bank so you can pay the card off completely each month. I do this and never pay interest and also get 1 or 2% f my purchases back. I generall get a check from the card company for about $100 twice a year.
--------------------
Help someone smile today!!!
Welcome to paradise!!!
|
Previous
Index
Next
Threaded
Edit
Reply
Quote
