GEORGE, I know it seems silly, but I made a promise to myself to never go in debt again (unless it is a dire emergency). It is a wonderful feeling to wake up and know you don't owe anyone a dime (other than this months CC bills). If I want to take a day off, Im not stressed about how many billable hours have I lost. The pursuit of the almighty dollar just doesn't thrill me like it did, post 9/11, I'm learning to value other things more. JohnM
Lol, but if you had invested in CreditWorks, LLC you could have made a nice 19.47% APR. Don't forget IMclone, Kmart, Tyco and best of all WorldCon. www.creditsense.com
Well said John, The whole point is; now that you've saved yourself $500 a mo. in interest one can invest it. $500 a mo. @ 10% for 30 years is: $1,130,243.96 Dividing that by 12, divided by 30 = $3135.57 And that's not even to mention the further tax savings by investing in an IRA or other qualified plan. See, you could give lessons; How to leverage $500 a mo into $3135.57 a mo. for retirement. AND ALL THIS REQUIRING NO ADDITIONAL CASH OUTLAY FROM YOUR BUDGET. I wish I had more clients like you. Good JOB!
This is easy. 1. Apply for the ATT Universal Card (can you do it online or via phone)? 2. Use planetfeedback tonight and write Cap1. Clearly you have a good product with them... still, let them know you really like Cap1 but you're now getting better offers... Ask for the Plat product (if you don't have that now) and ask for either an intro rate or at the very least 8.9 fixed across the board). When you talk with the Exec dept... ask for a 0% and if you get a no, the 8.9 is no big deal.... trust me. By the way, if there's an annual fee, get it rebated for life too... after all, that's what Platinum is and an annual fee is just paid up front interest. 3. If you get the 0% ATT card, transfer the full balance from Cap1 to them. Leave the now 0 balance Cap1 card at home and don't use it (and then you should also have a Plat card from your Planetfeedback letter with no annual fee and a fixed 8.9 across the board interest rate)... a nice card indeed 4. If you either don't get the ATT card or get it for less than 5k, transfer all you can to the 0% and then pay up to 3k of your savings to any remaining balance at Cap1... or in lieu of that... if you get say 2.5k from ATT, apply for a new Cap1 Plat and then call the Exec dept to get 0% intro for at least 6 mos...no annual fee... 8.9 after that... it may take the exec dept to get what you need so ASK them... The point is this: move all your money to 0 interest right now... either with ATT or Cap1 (another new card with an intro rate)... Whatever is left... if anything is left on the current Cap1 card... pay it off up to but not exceeding 3k out of your savings... 5. Leave at least 2k in your savings account no matter what you do. You HAVE to have savings. I actually prefer 2.5k but 12 percent is way too high so that's why I'd take up to 3k in savings out to pay it off. So... you're left with only several scenarios 1. 5k Citi 0 rate 5k ATT 0 rate 5k savings 2. 5k Citi 0 rate 2.5k ATT 0 rate... and/or 2.5k Cap1 0 rate (new card or 0 applied to current card) for a 5k total 3. 5k Citi 0 rate 2.5k ATT 0 rate 2.5k paid to Cap1 out of savings (up to 3k max) 2.5 left in savings (but no less than 2k) You're left with only 0 rate balances and good credit. Then... over the next year... pay the minimums on the cards and save your money in at least an ING 3% rate... when the intro rates are about to expire... pay the cards off in full or transfer to new 0 rates. Done and done. there is actually one other option... (if you can't get good rates for the remaining 5k out there on the Cap1 Plat) that's buy a 5k cd from USAA, get a cd secured loan for 5k, pay off the new installment loan at an effective 2.65 percent rate... and take 3k of the money that's disbursed from the new installment loan and pay off Cap1... leaving you still 2k to put back into savings... here... you would also get a score boost as it takes 5k from your revolving credit and adds it to your installment loan segment... and when you're done.. you have a 5k cd You just pay off an installment loan and not a credit card. Take the cd and the loan for 30 mos or so and it's a reasonable payment.
Thanks for all the great suggestions Marie...whew! 1. The AT&T app will be done over the phone next week. 2. Believe it or not, I've never done a Planet Feedback thing before, but I'll figure out how and give it a try. The Cap One card I have is a Plat MC, no annual fee, 11.9% fixed, with a BT rate of 9.9% (although when I called a few weeks ago, they offered me a BT rate of 8.9%). 3. Yep, that's the plan! 4. Now that I hadn't really considered...spending part of my savings instead of ALL of it. Excellent idea. That way I could wipe out half of my Cap One balance and still have 2,500 left in savings. I'll also look into a CD-secured loan. I called my bank a few weeks ago about that one, but a secured loan was like 9% or something...kind of a joke if you ask me, but maybe the bank rep wasn't familiar with that particular loan and the rates are actually lower than that. I can't see 9% on a SECURED loan! Thanks again for the great advice
outofdebt , you didn't mention whether you're a homeowner or a renter... if owner, do you have any home equity to tap into, perhaps with a no-fee HELOC? You could open that, and use it as your e-fund, then use savings to pay off debt.
Man, I wish I were a homeowner. This whole situation would be a no-brainer if that were the case. I might try to buy a home in the next 3 years or so. Right now, I'm planning to go to grad school in about 3 years as well, so buying a home might be 5-6 years down the road.
No, no, and no. Don't do this, unless your home equity is not secured by your home (most are though). Never make unsecured debt...secured debt. Say you lose your job, it doesn't matter that your home equity loan is 5.75% and your credit card is 19.99%. If you can't afford to pay for the credit cards how will you be able to pay for the home equity loan? Instead, of chargeoffs you will end up with a foreclosure. Again, never make unsecured debt secured debt. Dani
Dani, I respectfully disagree. Note I suggested that the HELOC be used as a rainy day fund, NOT to replace unsecured debt. outofdebt has savings at 2% that would cover that. Also, a HELOC is an interest-only line, not a loan. Unless a draw is taken (e.g. in an emergency, or for other good reason), there never WILL be any payments to make. Unforutnately, it looks like the whole discussion is moot in outofdebt's case.
Anyone considering a HELOC should be aware that it reports on the CRA's like a credit card - even if it is secured by real estate. Thus it will affect your usage/available credit ratios and drive down your score (depending on how much, if any, your draw). If you get a HELOC and don't use it, FICO treats it as though you have a credit card with a MASSIVE available credit line (which might help your score). If you use your HELOC for traditional real estate puposes, such as adding a bedroom for a child, fixing your roof, etc., FICO doesn't care, it's treated for scoring purposes just as if you had blown it all on expensive restaurants and clothes.
An HE loan is a real estate loan just like any other mortgage. The reporting and scoring for them is no different from that of Ist. and 2Nd.mortages. Racer where did you get your information?
lb, Racer is correct. He is talking about a home equity line of credit, which is a revolving line of credit attached to your home. There is also a home equity loan (which you are referring to) which is an installment loan attached to your home. You take out a loan on a specific amount and then make monthly payments toward it, until it is paid off. Dani
Actually, it depends on how the bank reports your HELOC. I have had HELOC lines that didn't report to any of the big 3 bureaus at all, and none of them ever reported like CCs (I've only had 3 though.) It certainly makes little sense for a HELOC to report just like a CC. It is secured, and constrained by a real asset. Dani, I gather that you disagree even in the case where the line is held in reserve as a rainy-day fund?
lb, As Dani mentioned in this thread, a HELOC is different than a standard HE loan, and I wanted to warn people who might not be aware of the difference. In order to buy my current house at a low interest rate, my broker got creative and packaged a conforming first mortgage with a 10 year HELOC. I can either pay it off or re-fi. It was worth it to get into the house, but even though it was used for the purpose of purchasing my primary residence, it reports as a $100,000 MAXED-OUT CC. Puts a little damper on my score.
1*This is still just one of many types of realestate mortgages. 2*Same thing on this one.Also this one is not an installment loan. 1*&2*While the repayment terms may be different between the 2 it is not the repayment or other terms that determine the type of financing the loan is. I would still like to know where Racer got his information or at least how he came to his conclusions. BACKGROUND: 2*Financial Services 18 Years 5*Business Owner-Housing Company. 29 Years Wouldn't you say my above experience gives me some idea of what I'm talking about here?
