Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics > Personal Finance
 [Register]
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.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 10-23-2017, 02:24 PM
 
270 posts, read 202,262 times
Reputation: 200

Advertisements

Quote:
Originally Posted by Cod3red View Post
Well I haven’t put anything into it for about 3 years. That’s more then a 5% return on my money, doesn’t sound that bad. I may have earned closer to 2500, didn’t do exact numbers. I also have not done a real budget because my income is so up and down but I have gave myself an amount per month.



My Roth is personal, not through work, I’m not sure if I can borrow from it or not, may have to look into that. However I also mainly want to eliminate his debt not consolidate it.
5% is actually pretty bad, all of my accounts are making anywhere between 15-30% ROI a year.
Reply With Quote Quick reply to this message

 
Old 10-23-2017, 02:31 PM
 
270 posts, read 202,262 times
Reputation: 200
Quote:
Originally Posted by Cod3red View Post
So I just barely found this forum and read around a few threads and it looks like a great forum, I believe I came to the right place!

Little bit about me, I’m 28, I make about 40k a year, im not a beginner to personal finance but certainly not an expert. I took a few finance classes in college when I was 19 that taught me a lot about how I even got to where I am today. I have built an emergency fund of approx 8k that I Store in a high yield savings account. Since I was 21, I have been saving 20% of my income and have been putting all that money into a Roth which I have now accumulated approx 31k. 29k of which I put in and 2k or so from what I’ve earned in interest. All the money in the Roth is currently invested into stocks. When I was 21 up until about 25, I was a huge credit card person having about 17 credit cards and around a 790 credit score. I was always chasing rewards on every purchase, there wasn’t one thing I wasn’t earning rewards on for making that purchase. Also paying all balances in full at the time every month. Fast forward to today, I have approx 20 credit cards, most with 10k limits and higher.

Now to the VERY bad stuff. Within the last 3 years or so I’ve made some very bad mistakes financially that have landed me in a huge hole where I can barely breathe. I’ve accumulated around 35k in debt. At the moment I’ve been able to dodge interest rates by balance transferring between all those credit cards I had from before as I never use them so they are always sending me 0% apr for balance transfers and I just pay the 2-4% BT fee. So currently I have 7 cards that have balances from 2k to 6k and one at 9k.

Now I have been striving so badly to get rid of this debt and get back to how I was before. I have been running a few ideas in my head.
1. First idea is to take it slow and use the snowball method. Pay the smallest balance first as I’ll build momentum then pay the next lowest balance and snowball the rest until I have 0.
2. Second idea is to file bankruptcy which seems to be the easiest route getting rid of all the debt the fastest but possibly ruining my life for the next 7 years. With me having a Roth, none of the credit card companies could touch the money and with me being knowledgeable about credit, I’m was pretty sure I could build my credit again within a couple years. I’ve met with a bankruptcy lawyer and have decided this is not how I want to handle it.
3. Now for the last idea I have been strongly considering is to tap into my Roth. Sell all my stocks and take the money I initially put in, around 29k, and pay off my credit card debt with it. I would have about 6k left in debt which I would eliminate soon after. I would then save and built the money up again. The down side to this is I can only put in 5500 a year which it would take me another 5 years to save up 30k again in my Roth.

With that said, I have been really considering number 3, was going to pass it by a financial counselor but remembered how much I loved the credit card, Car, anything and everything forums and decided to search for a good personal finance forum which I am here today. I plan on being a long member as soon as I am able to get out of this mess myself. I do have the strength and plan not to get into this situation again as I have found out how terrible it is and how much stress it causes in my life.

Just a quick recap:
- I have 31k in a Roth, 29k which can be taken out if I’m not mistaken.
- 8k emergency fund which I do not plan to touch.
- 35k in credit card debt all cards with 0 interest rates currently.

I will now leave it up to you guys, thank you for all that stuck around to read my long rambling story. If any of you can give me some advice I would greatly appreciate it. What’s the best way to get out of this mess?

Thank you!
You should take 7k from you emergency fund and put that on your debt immediately. Do not take money from you Roth. Instead stop contributing to the roth and use that money to snowball the debt that you currently have. You should probably get a second job or a better paying job to help knock out the debt faster. Lowering your lifestyle can also help you to pay the debt faster. Move to a smaller apartment. Cut cable etc. The more you do the increase the amount of money you can pay on the debt the faster you can make it go away. Also you need to take a look at the funds you are invested in, in your roth account. You should be getting 15-30% for you money each year. A simpe index fund will put you in this range
Reply With Quote Quick reply to this message
 
Old 10-23-2017, 02:39 PM
 
4 posts, read 3,263 times
Reputation: 11
Quote:
Originally Posted by Cod3red View Post
Thank you all for the great quick responses!



I was strongly considering just buckling down and paying it off over the next 2-3 years up until recently when I started to consider what moonlady mentioned. If I just get rid of it now, that would free up a lot of my cash flow and I would be able to save again and most importantly I would have my life back, and would solve most of my stress in life currently. I have plenty of time to save and build my assets again to be even higher. Main thing I have to make sure I do not repeat this experience with debt.

Edit: Thank you moonlady. Personal Experience is always the best advice as if you could go back in time and have another chance at your decisions. So it would be best to take out all the money in my Roth, pay off the debt except 6k. Clear that and start savings again? I feel like it’s like hitting the reset button. After all as you mentioned, most people don’t start saving until late 20s to 30s I’ll consider me saving at 21 a get out of jail free card if you will. Although no longer ahead of the rest.

Anymore advice always welcome! Thank you much!
I definitely would pay it if you can and start paying things in cash. If you don't have the cash dont buy it. Put 1/3 of your pay check in savings right after you get paid and defiantly look up Dave Ramsey and do the debt snowball if needed. All of Dave Ramseys cash saving tips are wonderful. Good luck.
Reply With Quote Quick reply to this message
 
Old 10-23-2017, 07:11 PM
 
5,401 posts, read 6,475,393 times
Reputation: 12016
The 3 vehicles with different purposes means you need to have three auto insurance policies & three sets of license tags & then there is maintenance. Just how much do you need them all?

What is your budget? Writing it out may make you confront something that you aren't thinking of.

You can work your way out of this.
Reply With Quote Quick reply to this message
 
Old 10-23-2017, 08:25 PM
 
Location: Florida
6,593 posts, read 7,256,025 times
Reputation: 8102
Quote:
Originally Posted by Cod3red View Post
So I just barely found this forum and read around a few threads and it looks like a great forum, I believe I came to the right place!

Little bit about me, I’m 28, I make about 40k a year, im not a beginner to personal finance but certainly not an expert. I took a few finance classes in college when I was 19 that taught me a lot about how I even got to where I am today. I have built an emergency fund of approx 8k that I Store in a high yield savings account. Since I was 21, I have been saving 20% of my income and have been putting all that money into a Roth which I have now accumulated approx 31k. 29k of which I put in and 2k or so from what I’ve earned in interest. All the money in the Roth is currently invested into stocks. When I was 21 up until about 25, I was a huge credit card person having about 17 credit cards and around a 790 credit score. I was always chasing rewards on every purchase, there wasn’t one thing I wasn’t earning rewards on for making that purchase. Also paying all balances in full at the time every month. Fast forward to today, I have approx 20 credit cards, most with 10k limits and higher.

Now to the VERY bad stuff. Within the last 3 years or so I’ve made some very bad mistakes financially that have landed me in a huge hole where I can barely breathe. I’ve accumulated around 35k in debt. At the moment I’ve been able to dodge interest rates by balance transferring between all those credit cards I had from before as I never use them so they are always sending me 0% apr for balance transfers and I just pay the 2-4% BT fee. So currently I have 7 cards that have balances from 2k to 6k and one at 9k.

Now I have been striving so badly to get rid of this debt and get back to how I was before. I have been running a few ideas in my head.
1. First idea is to take it slow and use the snowball method. Pay the smallest balance first as I’ll build momentum then pay the next lowest balance and snowball the rest until I have 0.
2. Second idea is to file bankruptcy which seems to be the easiest route getting rid of all the debt the fastest but possibly ruining my life for the next 7 years. With me having a Roth, none of the credit card companies could touch the money and with me being knowledgeable about credit, I’m was pretty sure I could build my credit again within a couple years. I’ve met with a bankruptcy lawyer and have decided this is not how I want to handle it.
3. Now for the last idea I have been strongly considering is to tap into my Roth. Sell all my stocks and take the money I initially put in, around 29k, and pay off my credit card debt with it. I would have about 6k left in debt which I would eliminate soon after. I would then save and built the money up again. The down side to this is I can only put in 5500 a year which it would take me another 5 years to save up 30k again in my Roth.

With that said, I have been really considering number 3, was going to pass it by a financial counselor but remembered how much I loved the credit card, Car, anything and everything forums and decided to search for a good personal finance forum which I am here today. I plan on being a long member as soon as I am able to get out of this mess myself. I do have the strength and plan not to get into this situation again as I have found out how terrible it is and how much stress it causes in my life.

Just a quick recap:
- I have 31k in a Roth, 29k which can be taken out if I’m not mistaken.
- 8k emergency fund which I do not plan to touch.
- 35k in credit card debt all cards with 0 interest rates currently.

I will now leave it up to you guys, thank you for all that stuck around to read my long rambling story. If any of you can give me some advice I would greatly appreciate it. What’s the best way to get out of this mess?

Thank you!
If you go with #3 leave the 8,000 (or 7,000 or...) in the ROTH as your emergency fund. You can put the money in a CD or cash or take a risk and leave it in stock (assuming you will probably not need it). Then start building up the emergency fund when you can.
Reply With Quote Quick reply to this message
 
Old 10-24-2017, 12:08 AM
 
30,860 posts, read 36,775,907 times
Reputation: 34404
Quote:
Originally Posted by mysticaltyger View Post
The S&P 500 Stock index has been reaching all time highs. It's going to fall at some point. No one knows when that will be. The problem with being 100% in stocks is that a fund that's 100% stocks WILL go up and down a lot, and it's nearly impossible to predict the timing. The key to getting good results is BEING CONSISTENT. Put money in a reasonably diversified vehicle like the ones I list below, keep adding money, and leave it alone (i.e. don't move from fund to fund).

I would recommend moving your assets over to Vanguard.

However, there are other good balanced funds that are worth considering if you don't want to do that.

Berwyn Income (rough equivalent to the conservative Vanguard Wellesley Income).

Somewhat more aggressive balanced funds that are also worth a look:

Dodge & Cox Income
Vanguard Wellington (I think you have to have an account with Vanguard only for this fund).
Oakmark Equity & Income
Fidelity Balanced
Mairs & Power Balanced

Any one of the above funds will do.
Oops, correction: I meant Dodge & Cox Balanced, not Dodge & Cox Income. Dodge & Cox Income is a bond fund (100% bonds) and would be too conservative for a long term investment. Dodge & Cox Balanced is usually somewhere between 50% to 75% stocks with the rest in bonds and cash. So you still have bonds to cushion the blow in a stock market downturn, but you still get most of the growth potential from stocks.
Reply With Quote Quick reply to this message
 
Old 10-24-2017, 08:50 AM
 
Location: TN/NC
34,848 posts, read 30,929,707 times
Reputation: 47173
I would sell two of the least used cars (or keep the most reliable/newest) and put that toward the credit cards. If you need a pickup, rent one for the day.

I would also pay off at least one of the CCs. Balance transfer bonuses will run out eventually unless you keep opening even more cards. I would also transfer the lowest balance card (if one is truly low) onto a card with a higher credit line, to consolidate the number of bills you have to pay each month, all other things equal. It's easy to simply lose track of it all.

Don't do a debt consolidation loan. I did when I ran up CC balances. They charge huge origination fees to even fund the loan, and the interest rate, while less than CC, is likely still over 10%. You can probably keep gaming it with low/no balance transfer teaser rates on CCs that are cheaper than a steady rate on a personal loan.

Your biggest problem is your income. $40,000 is just not that much to work with, especially if you have rent and the standard obligations of life. Even debt free, it can be tough to manage on that. If you've been in same field for years, you need to try to find a better job. If you had been making $50,000-$60,000 over the years, the balances may not have been run up at all. I had a couple of years of low income where the cards got ran up. It's tough when you're lower income.

One thing about bankruptcy. I'm not advocating this, but it is not the end of the world like some people mention. I haven't personally been through it, but an ex did when I was with her. The whole process from the legal standpoint was fairly routine. Her auto interest rate due to her poor credit was like 9%. After the BK, it was 12% on the car she got it after the BK. With the negative equity gone, she had a shorter term, smaller balance, and lower payment than under the prior conditions. Her ability to get credit was extremely limited, but she couldn't keep on like she was doing and needed to establish a new baseline.
Reply With Quote Quick reply to this message
 
Old 10-24-2017, 10:38 AM
 
419 posts, read 384,788 times
Reputation: 1343
Good for you for deciding to pay it off slowly and work more hours. I think it is wise not to take from the Roth IRA. That's your future and will take a long time to rebuild. If you took the IRA, it's as if you would be sacrificing your future just to be able to keep 3 depreciating assets, your cars. I would suggest re-examining the value and expense of owning 3 cars at this time in your life.
Reply With Quote Quick reply to this message
 
Old 10-24-2017, 12:04 PM
 
8 posts, read 8,399 times
Reputation: 20
Just for clarification, I do not own 3 cars. I own 1 Car, 1 truck, and 1 boat. Both my car and Boat are paid off. Sure if I was in a rush to pay off my debt I would sell my boat and truck and drive my car since it’s paid off. That would save me quite a bit and the debt would be paid off in less then a year. As I mentioned earlier, my income is very flexible. I’m hoping to make close to 60k if I work full time hours at one job and the other 2 times a week on my days off. If I sell my boat and truck and put the money toward my debt and work more I would probably pay off my balances in 6 months. Personally I’d rather keep all 3 vehicles and work more. I plan to pay off most debt this next year and finish it off the following year. As far as insurance goes, I pay $210 for truck and Car, $300 a Year for Boat (not required, I choose to do so for safety of always having lots of friends, family with me). I considered selling my car however since it had been in an accident (not my fault) it is only worth about 4K from dealer unless I sell it private party. My family purchased the car for me out of high school for around 45k, I paid payments through the years until it was paid off. Plus I love my sports car, definitely not worth 4K to me to sell it, plus I put upgrades when I was 18 that equate to much more then 4K. As far as truck goes, I tried saving money by purchasing 2 used ones, I honestly did not want a loan to pay for as all I needed it for was to tow my boat. First one completely rusted out, paid 4K for it on a CC, got my money back from the Bank. Sold the truck for 1k to family, they cleaned it up a bit and now runs decent. However I would not want it back as it has hard time towing my boat and I don’t feel it is safe with a rusted hitch, now cleaned up a bit, but still the rust is underneath. Second one was a F250 6.0 I got for 10k and kept breaking down, it was totally useless. I spent 9k trying to save that one, then finally had enough and sold it within a year and purchased a new truck. I knew it would have no problems with the new one. So I knew I would save a ton of money there from maintenance with the warranty and it being a Toyota.

So there it is. Im not crazy, no way would I have 3 cars, 3 trucks or a mix if they didn’t each have a purpose.

Last edited by Cod3red; 10-24-2017 at 12:13 PM..
Reply With Quote Quick reply to this message
 
Old 10-24-2017, 12:10 PM
 
30,860 posts, read 36,775,907 times
Reputation: 34404
Quote:
Originally Posted by Cod3red View Post
So there it is. Im not crazy, no way would I have 3 cars, 3 trucks or a mix if they didn’t each have a purpose, or kids.
On a 40K, income, I'd still say 3 vehicles is not acting your wage. I know--you didn't want to hear that.
Reply With Quote Quick reply to this message
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.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics > Personal Finance
Similar Threads

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top