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Home > Ack!! I am now paying almost $20 per day in CC interest! I'm bleeding!
 

Ack!! I am now paying almost $20 per day in CC interest! I'm bleeding!

January 24th, 2009 at 12:25 am

On what used to be at 0% and 2%. Soo, my choices at this point are:
1. Withdraw from savings, take a huge tax hit and likely some penalty.
2. Keep desperately trying to refinance somewhere below 12%.
3. HELOC.
4. Remortgage. I think I have about 6 years left at 5.75%. I have plenty of equity but it makes me sick to even think of doing this.
5. Pay big bucks to get a financial planner who specializes in disaster recovery!
6. Run away to Brazil.

And of course continue to squeeze the budget, but it takes time to squeeze out this kind of dough.

15 Responses to “Ack!! I am now paying almost $20 per day in CC interest! I'm bleeding!”

  1. homebody Says:

    Ralph the weekend is here. Time to sit the wife down and have a little talk. I don't get it do you guys live where the women are all Wives of Orange County or something? Seriously Ralph how much more stress can you take trying to swim upstream??

  2. NJDebbie Says:

    I say don't use your HELOC (NEVER EVER use your home to pay cc debts)

    Don't waste your time or money on a Financial Planner

    If I had 6 years left on my mortgage with that fantastic % rate, I'd be jumping for joy.

    Do you have enough to savings to cover a minimum of 6 or 8 months of expenses? If you do, I would tap into savings to pay off debt.

    Running away to Brazil would be awesome!!! ;-)

    Just my two cents! Good luck with whatever you decide to do. Don't despair there is light at the end of the tunnel.

  3. ralph Says:

    homebody, the money has mostly gone toward spoiling our girls, but my wife does suffer from financial denial.

    NJDebbie, my savings are nebulously locked up in an old plan from an old employer, that was originally a savings plan but has seemed to get more 401k-like.

    Brazil or anywhere without NJ's high cost of living sounds much better than staying here.

  4. Amber Says:

    I agree sit your wife down and have the talk ASAP and do not use the HELOC or get a financial planner
    If you can tap into the savings, I too agree and get the debt down
    good luck

  5. scfr Says:

    As a sideline observer who does not know all the details (and could therefore be way off base), here are some suggestions:

    1. Absolutely sit down and talk with your wife. Explain how much you are paying in interest now. Ask her which she prefers, having debt in her name (to get the 0-4% interest and do the transfer) or paying over $7K per year in interest on the CC companies? Hopefully she'll agree to do the transfer ... Then, look at the budget and come up with a plan to get the cards paid off. Plan a payoff date well before the 0% (or 4%) rate expires, because Murphy will come visiting and there will be setbacks along the way, so give yourself some wiggle room.

    2. Do your taxes ASAP. If you will be getting a refund, send the return off ASAP to be first in line for a refund, and apply 100% of it to the CCs. (If you will owe, wait to mail until the last minute.)

    3. What can you sell? A car? (It may not be a treat to get by with only 1, but it can be done, especially when only 1 spouse is working.) Can your wife sell on Ebay (or Craigslist) the things your girls have outgrown? Can you guys go through one room of your house each weekend sorting out things you no longer need, to get ready for a big garage sale in the spring? If 100% of sale proceeds went to the CCs, wouldn't that help? (And from personal experience, seeing how much things sell for second-hand is a great deterrent against buying any more unnecessary stuff.)

    Good luck!!!

  6. merch Says:

    Agree with SCFR. 2nd or 3rd job? Just another option.

  7. homebody Says:

    His wife should get a job before he gets a second or third in my humble opinion.

  8. Analise Says:

    I vote for #6.

    Seriously, $20 a day = $600 a month, a tidy sum. You must plug this black hole.

    I agree that a HELOC should not be used to pay CC debt, but here's something to think about. If you already have a HELOC, it likely has a low interest rate, much lower than any CC. And, interest from a HELOC is tax-deductible, but interest from CCs is not. I MIGHT use your HELOC but only if there is a plan to systematically pay off extra every month, and ONLY IF you and your DW reform the way you use CCs (only spend that which you can pay off each month). If you do not already have a HELOC, you may not be able to get one with so much CC debt... but if your credit is good, then you might but there would be fees involved... not good. You need to think about the pros and cons. Using your HELOC could be disastrous if you turn around and rack up more CC debt. But if it helps you get out of this hole, then maybe it would be OK, but think it through. Only you understand your family dynamic about spending money.

    I would not hire a financial planner... you can figure this out w/o having to spend extra $$ on a planner. Also, with only 6 years left on your mortgage and a rate of 5.75% (not bad, really), I would NOT remortgage... you're too close to paying it off. I also would not use 401K funds, because it sounds as if you'd have to pay penalties and/or taxes.

    Time for a family pow-wow. Definitely have a meeting with your DW to discuss your options and give her a reality check. One option night be that DW helps by getting a part-time job (providing childcare at home, temp work, etc.) or at least helps you figure out how to rein in the family's CC spending once and for all. Good luck!

  9. Petunia Says:

    I also vote (are we voting on what you should do??) for a discussion with your DW. You know your DW and what you need to do to give her the information. For my DH, I have to avoid my natural tendency to give every last detail, keep it brief and provide visual aids. Seriously. The several initial conversations were not. . . pleasant, but reality isn't going to change by not facing it. Good luck.

  10. Koppur Says:

    hi Ralph. First, I just have to say that's stinky. Frown I'm sorry you're paying that much. I don't know all the details re: your wife working and /spending habits. I think though that as a team being on the same page would work best, so defiantly have that talk. One thing I will advise you not to do is a CC settlement company. They don't tell you, but whatever you settle with the CC for as a payoff amount counts as income and you have to pay major taxes on it the year you pay it off.

    I don't really have any additional advice beyond what they others have suggested. Just wanted to offer my support. Good luck!

  11. fern Says:

    You say you make a good income in your profile, so surely you can find some discretionary money and apply it toward the credit card debt. Paying more for a planner's advice should not be necessary. Pay down the debt!

  12. CouponAddict Says:

    After reading your posts back to the start of the month this is what I suggest. I would not do any of the things you suggested. I would increase income and decrease spending!

    Create a spread sheet of all your debt, show the family and ask what they are willing to do to help stop the bleed.

    I would ask wife (who does not want the debt in her name). If she a wants to get a low interest rate credit card, get a job now that the children are older, or a plan C. Now by getting a job this could be a work at home thing such as putting household items on ebay. *She is the other partner in this relationship so she needs to help a little with getting the income up or the spending down. You are a team and need to get her on the same page.

    I did not see a budget posted on your blog. I would suggest you track spending and bills and post your bills and income on your blog and others can point out to you easy ways to cut spending.

    All those clothes for the Girls that you are so upset about, time to take anything they have outgrown and sell them on Ebay, or a consignment shop such as platos closet or once upon a child.

    Good Luck!

  13. Ralph Says:

    Thanks, all, this is good for me to discuss this, but I feel self-conscious about it, so I'll try to move it in the positive direction as suggested. Just to rough out a budget:
    Housing including utilites: 28% of income
    CC minimum payments, 14% Frown (Right off the bat, that is too much debt, as BoA has so astutely pointed out now that they are in recovey mode, having done such a great job of hooking this fish)
    Ahh, I'll go to my quickenonline and make a new post. Suffice it to say that Christmas always kills us, a sore point between us for 20 years now, as well as clothes, auto expenses (mostly NJ's high insurance for 3 drivers, plus gas until recently, and some repairs and maintenance since all our cars are older, so we are saving there. Car # 3 payment due to end soon - yay! The rest are paid for, thank goodness.)
    See my post on lawn care for another area to cut and save up to $1000 per year!
    Yes, we have cable/Internet, but my wife did negotiate that down to $80 versus teh $100 is was. Still pay about $25 per momth each to AT&T and Verizon for a landline, guess I need to cut that. And food is probably the best area for saving. We have severely curtailed dining out, but my wife is still somewhat of a fast food junkie, and she likes the expensive stuff! But she has trimmed back a little thanks to DD2's insistence on eating healthy, and the daughter is starting to get assertive on that! Thank goodness for any help I can get!

  14. Ralph Says:

    Thanks, all, this is good for me to discuss this, but I feel self-conscious about it, so I'll try to move it in the positive direction as suggested. Just to rough out a budget:
    Housing including utilites: 28% of income
    CC minimum payments, 14% Frown (Right off the bat, that is too much debt, as BoA has so astutely pointed out now that they are in recovey mode, having done such a great job of hooking this fish)
    Ahh, I'll go to my quickenonline and make a new post. Suffice it to say that Christmas always kills us, a sore point between us for 20 years now, as well as clothes, auto expenses (mostly NJ's high insurance for 3 drivers, plus gas until recently, and some repairs and maintenance since all our cars are older, so we are saving there. Car # 3 payment due to end soon - yay! The rest are paid for, thank goodness.)
    See my post on lawn care for another area to cut and save up to $1000 per year!
    Yes, we have cable/Internet, but my wife did negotiate that down to $80 versus the $100 is was. Still pay about $25 per momth each to AT&T and Verizon for a landline, guess I need to cut that. And food is probably the best area for saving. We have severely curtailed dining out, but my wife is still somewhat of a fast food junkie, and she likes the expensive stuff! But she has trimmed back a little thanks to DD2's insistence on eating healthy, and the daughter is starting to get assertive on that! Thank goodness for any help I can get!

  15. Ralph Says:

    Thanks, all, this is good for me to discuss this, but I feel self-conscious about it, so I'll try to move it in the positive direction as suggested. Just to rough out a budget:
    Housing including utilites: 28% of income
    CC minimum payments, 14% Frown (Right off the bat, that is too much debt, as BoA has so astutely pointed out now that they are in recovery/CYA mode, having done such a great job of hooking this fish)
    Ahh, I'll go to my quickenonline and make a new post. Suffice it to say that Christmas always kills us, a sore point between us for 20 years now, as well as clothes, auto expenses (mostly NJ's high insurance for 3 drivers, plus gas until recently, and some repairs and maintenance since all our cars are older, so we are saving there. Car # 3 payment due to end soon - yay! The rest are paid for, thank goodness.)
    See my post on lawn care for another area to cut and save up to $1000 per year!
    Yes, we have cable/Internet, but my wife did negotiate that down to $80 versus the $100 is was. Still pay about $25 per month each to AT&T and Verizon for a landline, guess I need to cut that. And food is probably the best area for saving. We have severely curtailed dining out, but my wife is still somewhat of a fast food junkie, and she likes the expensive stuff! But she has trimmed back a little thanks to DD2's insistence on eating healthy, and the daughter is starting to get assertive on that! Thank goodness for any help I can get!

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