Credit Card Debt and Living Independently

[questions]

My question is: I have approx $20,000 of debt on 2 credit cards one at 2.99% till August 08 to then be 9.99% and the other 3.99% for life of balance. My dilemma is that due to this debt I am not able to live on my own independently and I am living with my sister for the past two years.

This debt was beyond my control but none the less my burden. I relocated to Abq, NM 2 years ago after the passing my last living relative and parent. I am currently pursuing a Associates degree at ITT Technical and have 1.5 quarters to graduation, with a GPA of 4.0. I am full time employed with a 35k+ bonus salary.

Own my 2000 model Jeep Cherokee, and have a credit rating of 729. My confusion is in that I have a variable annuity of $24k and I am fully vested. I am 49 yrs old and single and have enjoyed living independently and my sister has a large house and they enjoy having me here and they want me to get on my feet and buy something not just rent, but I want to live on my own. If I leave and rent an apt. I will be struggling and making minimum payments to the debt and not saving anything.

These balances seem like they will take forever at this rate to pay down. I am of the mind now that my annuity would be to better use paying off that debt, but I am worried about the tax hit on using that money. On the other hand if I were debt free I could afford to purchase a condo and not rent. My question is two part, does it make sense to pay off the debt, how will it affect my taxes and would I even be considered for a mortgage (I would be a first time home buyer)?

I hope I included all the necessary information to allow you to share your opinion on this situation.

Thank You in advance,

P

[jIM_Ohio]

The annuity is an issue- it is a retirement planning issue, not a pay down debt issue. DO NOT cash out a retirement investment to pay down debt.

Can you post how you spend the 35k each year?
20k is NOT a lot of debt. I bet you could be debt free in 18 months if you post your expenses here.

Is the annuity funded through employer?
Will graduating increase pay?
Is there a 401k at employer?
Can you work a second job part time?

[bjl584]

I would also advise against cashing out a retirement investment to pay down the debt. Maybe try to balance transfer your debt to a 0% interest card and then see where you stand. Where did your cc debt come from in the firstplace? More importantly, have you learned a lesson from it? In other words, if you were to pay it all off and go get a place of your own, are you confident that you will not find yourself right back in the same position in a year or two?

[buzz]

I am 49 years old also, here is what I would do:

-shave my head
-buy a rice bowl and orange robe
-live like a Tibetan monk until those debts were paid
-sincerely thank my sister and her spouse often, show them how aggressively I was attacking that debt, and send them to the nicest restaurant in Alb every month or two

The first two are optional, but you do need to get serious about getting rid of that debt and out of your sister's hair. Wise use of her generosity will be a bond between the two of you, foolish use, a divide.

[Broken Arrow]

Hilarious, buzz! You had me scared at first... but you know what? That will work!

[disneysaver]

At your age, if that annuity is the only retirement account you have then you shouldn't even be thinking about using it to pay off debt! 20K may seem like a lot, but if you should be able to pay it down fairly quickly if you aren't having to pay your sister any sort of rent.