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Advice needed in paying of cc debt

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  • papa_squat
    replied
    Taking out a loan that large on a depreciating asset is just plain reckless. Even without the CC debt, I think OP should sell the car.

    Can your in-laws repay any of the debt you took to help them out? Having them help with the payments would make a difference in how quickly you pay the cards off.

    Keep about $1,000 of the bonus for emergencies and then throw the rest at the debt first thing. If you are still leaning toward taking the personal loan to pay off the rest of the CCs, constantly remind yourself that that's not getting rid of the debt, it's just taking new debt with a lower interest rate. If you really want to pay down the debt, sell the car, pay off the debt and then buy a car in cash or at least with a payment you can afford. If you decide you'd rather keep the car and take the personal loan, you have to take measures to make sure a lesson is learned and this kind of crisis doesn't happen again. As long as you have the car loan, it's going make any emergency you have to handle that much more stressful.

    And if you in fact had to take on the CC debt because of your in-laws, let them know it. Don't let them think you could afford to bail them out, because you couldn't. It's great that you were able to help them in their time of need, but you really are paying the price now because of it.

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  • dczech09
    replied
    [QUOTE=mgkimsal;327743]If the car could sell for $70k, it might make sense. If the car could only sell for, say $45k, that's a loss of $27k. Having to then get another car... let's say for another $20k - this is a $47k hit to deal with a $72k problem, which will likely be gone in a couple years anyway. Yes, money is money, but the OP has more pressing issues that can be dealt with more easily (kill $8600 card altogether, and roll those payments towards next card).
    [QUOTE]

    If the car sells for $45k, then that is a loss of $27k ($72,000 - $45,000).

    So the OP would have $27k left on a loan for a car they no longer own.

    They go out and buy a car for $10k or less (let's assume $10,000)

    So that is a debt of $37k ($27,000 + $10,000)

    Correct me if I am wrong, but isn't $37k in debt better than $70k?

    All I am saying is that selling the car will quickly improve the OP's situation. They do not need to buy a $20,000+ car. A $10,000 car can be just as reliable and "fashionable" if that is truly a concern.

    And I do not have any hostility to the OP's decision. I have a hard time understanding how they can justify holding onto that large of a car loan. Period. As I said before, that is too large of a car loan for ANYBODY.

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  • mgkimsal
    replied
    I'm reading quite a lot of hostility for this guy's (assuming it's a guy) decision on the car.

    I'm assuming he already understands it wasn't the best decision to make, but the decision's made. Can we stop beating people up if they don't follow everyone's advice 100% to the letter?

    "You keep saying that the car loan isn't hurting you, as if you're trying to convince yourself of this as much as you're trying to convince us."

    No, I think the OP is repeating it because people keep bringing it up. In the short term, he's not selling the car.

    If the car could sell for $70k, it might make sense. If the car could only sell for, say $45k, that's a loss of $27k. Having to then get another car... let's say for another $20k - this is a $47k hit to deal with a $72k problem, which will likely be gone in a couple years anyway. Yes, money is money, but the OP has more pressing issues that can be dealt with more easily (kill $8600 card altogether, and roll those payments towards next card).

    As much as I'm not a huge fan of 'flashy lifestyle' purchases, I'm imagining it's significantly easier for the OP to earn those $30k commission checks driving clients around in a $80k upscale car than a $20k used Toyota, however nice and economical that Toyota might be. OP - if I'm wrong, tell me. One question springs to mind - if you work fulltime for a company, do they pay you a car allowance, or reimburse you for part of that car payment in any way?

    Perhaps after 6 months, the OP may see the car issue differently, or may have a smaller delta between car balance and value, but will *probably* still need a more expensive car than most of us here would be comfortable with under any circumstances.

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  • dczech09
    replied
    Originally posted by needhelp View Post
    You are right.....
    Okay, so how much is the car worth?

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  • needhelp
    replied
    Originally posted by dczech09 View Post
    I am assuming needhelp is implying that the car will sell for less than the loan balance. Which would not surprise me at all. A $70,000 or $80,000 car will drop in value SHARPLY upon being driven off of the lot. More expensive cars tend to not hold their value too well.

    Again, I am assuming (and could be wrong) but it would not surprise me if this is the case.
    You are right.....

    Leave a comment:


  • dczech09
    replied
    Originally posted by neatdesign View Post
    Can you explain what you mean when you say you'll be losing "way too much money" if you sell the car? I've reread that sentence now several times and I honestly can't figure out how you could LOSE money by selling your car for $72k.
    I am assuming needhelp is implying that the car will sell for less than the loan balance. Which would not surprise me at all. A $70,000 or $80,000 car will drop in value SHARPLY upon being driven off of the lot. More expensive cars tend to not hold their value too well.

    Again, I am assuming (and could be wrong) but it would not surprise me if this is the case.

    But even so, selling the car for say $65,000 and having $7,000 on a note left over after the sale would be better than having a $72,000 guillotine hanging over one's head.

    Leave a comment:


  • neatdesign
    replied
    Originally posted by needhelp View Post
    Wether I like it or not, the car is staying. If I sell it right now, I will be lose way too much money.
    Can you explain what you mean when you say you'll be losing "way too much money" if you sell the car? I've reread that sentence now several times and I honestly can't figure out how you could LOSE money by selling your car for $72k.

    Leave a comment:


  • dczech09
    replied
    Originally posted by needhelp View Post
    Thanks for all your advices. Wether I like it or not, the car is staying. If I sell it right now, I will be lose way too much money.
    I just got confirmation that I will be getting my commission tomorrow. so i will at least take care of one CC. I was thinking I may pay off CC2's balance off completely. but that would mean I would have to wipe out the full commission amount. I know its the right thing to do, but I hate having the fact of a zero balance in my savings.
    Whatever. I love the language though. "Whether I like it or not..." Amazing.

    We gave you advice based on what we would do, and we thoroughly justified it. However you are obviously convinced against your own will that this car has to stay. I guess being debt free and having peace of mind is worth less than $72,000...

    So putting that aside, the next question you need to figure out is HOW you got that much credit card debt in the first place. Do you have plans to prevent that from happening again? If you do not, then the debt will just come back.

    You should question wiping out your full commission check to pay off debt? Do you know why you should question it? Because that shows you that it is the right thing to do.

    Savings is great to have, but having a ton a credit card debt almost defeats the purpose of having a huge amount of cash saved. I recommend you have SOME money set aside for emergencies (like a few thousand). But you also need to attack this debt. But I can already tell you are not fired up about it.

    Leave a comment:


  • DebtFree&Broke
    replied
    Car loan: $72,200 (balance) $1,944
    CC1: balance of $47,200 $2243.87
    CC2: balance of $30,500 $1451.28
    CC3: balance of $8,600 $395.86
    Total Debt: $86300

    Monthly Income $11,500
    Home Expenditures: $2,100
    Loan Payment (Minimum): $6044
    Total: $8144

    You need to stop adding to your savings every month and pay down your debts instead. The $2,700 you have will be enough until you get your commission. You only need 3-6 months of expenses in your emergency fund, so when you get your commission next month add to your savings until you have $12,600. Then throw the rest at the loans.

    Here are my suggestions for paying off the loans faster (all lowest balance first snowball):

    No changes: Will take you 34 months and $45,813 in interest. It will take you 30 months to pay off your first loan Card #3. Ouch!

    Pay $9,400/month (stop putting money in savings): Will take 20 months and $21,850 in interest. You will pay off Card #3 in 3 months.

    Pay $9,400/month and throw $23,100 of commission check at credit cards: Will take 16 months and $13,156 in interest. Card #3 will be paid right away and Card #2 will be gone in 4 months!

    Personal Bank Loan $61,100 (still paying $6044/month): Will take 31 months and $24,517 interest. In 25 months you will payoff all three cards!

    Personal Bank Loan & pay $9,400/month: Will take 19 months and $11,927 in interest. Your $25200 left on CC #1 will be gone in 6 months, and the bank loan within 13 months.

    Personal Bank Loan, pay $9,400/month, and throw $23,100 of commission check at credit cards: Will take 16 months and $7,783 in interest. That's all three credit cards and the car loan gone in 16 months!

    So if you can get a bank loan it will save you $5400 in interest, but either way you will be completely out off debt in 16 months. If you pay $9,400 a month and throw $23,100 at the debt next month you will save at least $32,650 in interest!!

    Leave a comment:


  • DebtFree&Broke
    replied
    Car loan: $72,200 (balance) $1,944
    CC1: balance of $47,200 $2243.87
    CC2: balance of $30,500 $1451.28
    CC3: balance of $8,600 $395.86
    Total Debt: $86300

    Monthly Income $11,500
    Home Expenditures: $2,100
    Loan Payment (Minimum): $6044
    Total: $8144

    You need to stop adding to your savings every month and pay down your debts instead. The $2,700 you have will be enough until you get your commission. You only need 3-6 months of expenses in your emergency fund, so when you get your commission next month add to your savings until you have $12,600. Then throw the rest at the loans.

    Here are my suggestions for paying off the loans faster (all lowest balance first snowball):Snowball debt calculator - Become debt free at WhatsTheCost.com

    No changes: Will take you 34 months and $45,813 in interest. It will take you 30 months to pay off your first loan Card #3. Ouch!

    Pay $9,400/month (stop putting money in savings): Will take 20 months and $21,850 in interest. You will pay off Card #3 in 3 months.

    Pay $9,400/month and throw $23,100 of commission check at credit cards: Will take 16 months and $13,156 in interest. Card #3 will be paid right away and Card #2 will be gone in 4 months!

    Personal Bank Loan $61,100 (still paying $6044/month): Will take 31 months and $24,517 interest. In 25 months you will payoff all three cards!

    Personal Bank Loan & pay $9,400/month: Will take 19 months and $11,927 in interest. Your $25200 left on CC #1 will be gone in 6 months, and the bank loan within 13 months.

    Personal Bank Loan, pay $9,400/month, and throw $23,100 of commission check at credit cards: Will take 16 months and $7,783 in interest. That's all three credit cards and the car loan gone in 16 months!

    So if you can get a bank loan it will save you $5400 in interest, but either way you will be completely out off debt in 16 months. If you pay $9,400 a month and throw $23,100 at the debt next month you will save at least $32,650 in interest!!

    Leave a comment:


  • bjl584
    replied
    Originally posted by needhelp View Post
    Thanks for all your advices. Wether I like it or not, the car is staying. If I sell it right now, I will be lose way too much money.
    I just got confirmation that I will be getting my commission tomorrow. so i will at least take care of one CC. I was thinking I may pay off CC2's balance off completely. but that would mean I would have to wipe out the full commission amount. I know its the right thing to do, but I hate having the fact of a zero balance in my savings.
    You can keep the car if you want, but it does represent an extra $1900 a month that you could put toward CC debt. Personally, I'd think about selling it, even if it meant taking a loss.

    If you have no money saved, then keep part of your commission (30% maybe) and use the rest to pay down the CC.

    Leave a comment:


  • needhelp
    replied
    Thanks for all your advices. Wether I like it or not, the car is staying. If I sell it right now, I will be lose way too much money.
    I just got confirmation that I will be getting my commission tomorrow. so i will at least take care of one CC. I was thinking I may pay off CC2's balance off completely. but that would mean I would have to wipe out the full commission amount. I know its the right thing to do, but I hate having the fact of a zero balance in my savings.

    Leave a comment:


  • neatdesign
    replied
    Originally posted by needhelp View Post
    The car loan is not hurting me, and I plan to pay that off in the next year or two.
    Originally posted by needhelp View Post
    The car loan is not killing me, in fact when I had taken the car loan, that was the only debt I had. What is hurting are the credit cards.
    You keep saying that the car loan isn't hurting you, as if you're trying to convince yourself of this as much as you're trying to convince us.

    The fact of the matter is that when you got the car loan, it wasn't hurting you -- because you didn't have any of this crushing CC debt. But now you do, and so now it is.

    Seriously, if you sold the car for $72k and then bought a new car for $22k in cash, that gives you $50k to throw at your debt, just like that. Then you can increase your current CC payments from $4100/mo to $6044/mo (old CC payment + old car payment) and you'd have all of your CC debt paid off in no time.

    Seems like a no-brainer to me!

    Leave a comment:


  • disneysteve
    replied
    Originally posted by dczech09 View Post
    A car loan for $72,200 is too large of a car loan for ANYBODY!
    You know, this is actually a very good point. Note that dzech did not say that a $72,000 car is too much for anybody. He said that a $72,000 CAR LOAN is too much for anybody. If you get yourself debt free, live well below your means and sock away cash for retirement and other needs and along the way stash $72,000 in cash that isn't needed for anything else and want to go out and pay cash for an ultra luxury car, that will be the time to do it.

    Leave a comment:


  • dczech09
    replied
    Assuming most of your CC debt is at that 29.99% APR, it really does not matter what order you clean things up. Go smallest payoff to largest.

    As for the car... SELL THE CAR! IT IS JUST A CAR!

    That hunk of metal is eating 17% of monthly income and that is not counting the gas, maintenance, and insurance. Sell it, get a much more inexpensive car and use any leftovers from the sale to knock out some of this debt.

    I know you THINK that the car is not the problem. Well guess what friend- that attitude is the problem. A car loan for $72,200 is too large of a car loan for ANYBODY! And it is costing you a fortune.

    I take it you're a salesperson. And that car was bought to impress clients. Question: would they be impressed to know that the thing is eating your income? I understand if you want to keep the car, but you gotta let it go. You can get something just as realiable for half of that freakin' balance.

    Leave a comment:

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