Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Okay, here's the question for all the financial wizards out there...
We are putting our home up for sale, and hoping to make around 10K on the sale. (Husband's job is transferring him, and we live in a depressed area, so we aren't gonna make a bunch on the sale) We have an embarassing amount of CC debt, due to our wedding. (15K) Should we pay off most of the debt and rent a home in the new area...or...Save the money for a down payment on a new home while paying on the cc cards? We are planning to rent for atleast 6 months, but that still would not be enough time to save a huge amount of money to put down on a house. Any suggestions or advice of any kind would be appreciated. Thanks in advance!
Interest on CC debt is more than int. on money market/CD. You might want to rent longer than 6 months considering present/future housing market, so saving a larger deposit would be an option. I'd pay as much off the cards as possible.
Unfortunately, Westcoast is most likely right, SkyeGirl. It really depends on your current financial situation (credit score, income, debt-to-income ratio, savings, assets, cost of the new home, etc.).
A lot of maybes. You may be able take the proceeds from the sale of your home and use it as a down payment for your new home and then take out a home equity loan or line of credit to pay off your credit card (essentially transferring your unsecured debt to one that is secured by your new home). You might then end up with a lower interest rate (the HELO/HELOC vs. the credit card), but this would place greater risk on your new home.
Why bummed about renting? Renting totally has its perks (low maintenance, fixed costs, etc.) In a lot of cases, it's a smart financial move.
I concur, not that I'm a financial guru. I can tell you that I was in a similar situation and rented for 3-4 years. I paid off all my debt and had saved enough money to actually put 20% down on my new house. Trust me, renting isn't THAT bad and like others said, it has its' perks. Get rid of those CC's. They're no good.
Okay, here's the question for all the financial wizards out there...
We are putting our home up for sale, and hoping to make around 10K on the sale. (Husband's job is transferring him, and we live in a depressed area, so we aren't gonna make a bunch on the sale) We have an embarassing amount of CC debt, due to our wedding. (15K) Should we pay off most of the debt and rent a home in the new area...or...Save the money for a down payment on a new home while paying on the cc cards? We are planning to rent for atleast 6 months, but that still would not be enough time to save a huge amount of money to put down on a house. Any suggestions or advice of any kind would be appreciated. Thanks in advance!
I disagree with the other posters because of one reason.
If you pay off the debt, in todays economy, how likely is it that in 6 months, or even longer, will you be able to come up with $10K to put down on another property? If you can come up with $10K in 6 months, then go ahead pay down the debt, it you think you can get a no money down loan (and you might be able to, regardless as to what most think) then go ahead pay down the debt. If you think though you will require $10K to put down on another house, put it away. Yeah, you'll loose money in interest by putting it away, but you wont have the problem of trying to save a sum needed for a down payment.
Okay, here's the question for all the financial wizards out there...
We are putting our home up for sale, and hoping to make around 10K on the sale. (Husband's job is transferring him, and we live in a depressed area, so we aren't gonna make a bunch on the sale) We have an embarassing amount of CC debt, due to our wedding. (15K) Should we pay off most of the debt and rent a home in the new area...or...Save the money for a down payment on a new home while paying on the cc cards? We are planning to rent for atleast 6 months, but that still would not be enough time to save a huge amount of money to put down on a house. Any suggestions or advice of any kind would be appreciated. Thanks in advance!
Pay off the debt. If things get bad in life for what ever reason and you add more debt to your plate (another house) you will not be in a good shape. Pay your debt off and take your time, pay the rest off. Once that is done then you can use the money that was going to credit card bills to save up for another down payment. This culture of debt in America is absurd to say the least.
Last edited by Wild Style; 01-02-2008 at 09:06 AM..
If your credit is good, apply for a 0% cc, and treat it like an ordinary bill sans the finance charge. If your credit is good and you're saving for a house, you may still be able to get away with it when you apply for the loan. Our strategy always was to put the money where it grows more...if you have an investment instrument that will pay 4% but your cc finance charge is 10%, then it only makes sense to pay the cc debt. Only time we crash down payment of cc debt is when it affects our ratios - getting a home loan or a good interest in a car loan.
If your credit is good, apply for a 0% cc, and treat it like an ordinary bill sans the finance charge. If your credit is good and you're saving for a house, you may still be able to get away with it when you apply for the loan. Our strategy always was to put the money where it grows more...if you have an investment instrument that will pay 4% but your cc finance charge is 10%, then it only makes sense to pay the cc debt. Only time we crash down payment of cc debt is when it affects our ratios - getting a home loan or a good interest in a car loan.
That's the thing bibit, the cc's are killing our credit to debt ratio, which will put a stop to any reasonable interest rate on a new mortgage. Our credit is good, but it is suffering because a) the balances are so high and b)we have complete stopped using them. Honestly, we are expecting a decent amount back from taxes (2000 or so) that is all going to pay one card off. Then we figured we would pay as much off with the proceeds from the sale of the house. Even if we are left with 1-2 thousand, we can handle that. I just feel sick that we put a damn wedding on credit, arghhh! We truly are responsible adults, and thought 15K for a wedding w/ 90 guests wasn't too bad. By the way previous poster, you are right, renting is totally do-able! I will feel so much better when we can walk in to a bank with NO debt and apply for a mortgage. Thanks for everyone's positive input, and for not raking me over the coals:-)
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
