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I am in debt after significant life events didn’t go in the ideal way. I have a plan to get out of it but could use some feedback or other suggestions. Can anyone give me advice?
Debt•Credit Card 2 - $13k at 0% until 5/24 (so imminent)
•$41k in HYSA at 5.4% (emergency fund)
•$37k bonus (20% of base) paid in March
pay off card2 now with your emergency fund or your bonus. whatever cash you have on hand now
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2mo
Make sure those cards are NOT store credit cards that hit you with the entire accrued interest if not paid in full by the end of the 0%. For example, you bought a bunch of furniture at 0% for 12 months, but many store cards keep track of 22% interest as 'deferred interest' and pound you with the entire 12 months interest amount if any balance remains at the end of the "0%" promotional period.
I think you already got good advice so I won't add to it, I just want to say I hope your wife and boys and you are happy and healthy. That's a lot to handle all at once, especially during the pandemic where being in a hospital was even scarier than usual.
Then you managed to get a new job on top of all of that. Taking care of what is important to you is what money is for. You'll be out of this soon and you've made really good choices.
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2mo
You did the right thing. Good on you for taking care of your family.
I have no financial advice, just want to say that you're awesome, holding all of that for your young family!! I hope you had some support while dealing with all of those traumatic events. Don't forget to take care of you, because you're important too. You did good, dad.
You take home $10k/month and pay $3k/month to your mortgage, $900/month to cars - where is the other $6100 going? You mention being able to put $3k/month towards the cards, so paying these off should be doable.
Pay off card 2 with your emergency fund. Don't pay a cent of interest if you can help it.
You have 10 months left to pay off card 1 - so start paying $1700/month towards it.
You have 14 months left to pay off card 3 - so start paying $300/month towards it.
That's $2k/month minimum to cards 1 and 3. The remaining $1k can go to rebuilding your emergency fund. Set these amounts to autopay on the cards every month. Any extra money you have, you can make manual payments to get the debt paid down faster.
By the time student loan payments start, your emergency fund should be back to $36k, give or take. Hopefully you'll be able to redirect the e-fund payments to the loans, and find $500 elsewhere in your budget to cover the loan payments until card 1 is paid off. After Feb 2025 the budget will ease up since you'll no longer have $1700 going to card 1.
I would honestly use the bonus (if it’s guaranteed) to pay off all the credit cards or otherwise throw about 30k from the HYSA into the credit cards leaving you with about 20k in the bank in the event of an emergency.
You are the definition of, “Life Comes at You Fast.” Best wishes to you!
You don't have an emergency fund because you have a full blown emergency on your hands. You need to sell those cars and het a cheap used car you can pay cash for. Keep $1000 and take $50,000 and start throwing it at your debt from the smallest balance to the largest, regardless of the interest rate. Then start making minimum payments on all debts except the smallest one and throw every dollar at that one until it is paid off and move up until all debt is paid, except for the house. Sell everything you can that is not a necessity. Stop investing in your 401k until you're out of debt. Yo make way too much money to be this broke. You might want to explore selling the house and renting for a bit. Downgrade until you're out of debt.
This is a bit extreme. He can handle all the cards even though they're at 0% by using the emergency fund.
The student loans aren't in payment status until next year, so he can rebuild the emergency fund and even add the loan payments into another HYSA and hit them with it when they return to payment status.
Selling a house and moving the family to a rental would likely be a zero sum game because an apartment for five people would likely match the mortgage without the equity advantage.
It gets him out of debt. He’s one layoff away from going bad to worst. This is not extreme. What’s extreme is the hike he’s dug himself into. And extreme circumstances call for extreme measures.
Interesting when you listed your debts you failed to include the balance on the "2 Hondas". For the salary you have, you shouldn't be this broke. I would examine not only all your debts, but also what caused it. I'm guessing your family has a spending problem in addition to the piled up debts you have. You need to attack everything and I agree that you should drop your emergency fund way down and pile that on those debts... what order you pay them doesn't matter so much if you commit to getting out of this mess in a reasonable period of time. If you intend to dabble at this for years, then yes, probably best to pay them in order of interest.
User deleted comment
2mo
Worth every penny and more for her recovery. PPD is for real and debt will be taken care of quickly - untreated PPD could have been devastating
You’re a good dad/partner 👏🏻👏🏻👏🏻
Yes you are living paycheck to paycheck. Hell I make the same amount, and I don't have the expenses you have.
Credit cards charging 20%+ are an emergency. Use your emergency fund to pay them off the moment they start charging interest. Then rebuild your emergency fund as needed.
Since Credit Card 3 is on 0% interest for an extra month, I'd hold off on it until either you pay off credit card 1 or the 0% period ends.