Last week I got an email from my friend Steve Rhode. Steve is president of the Myvesta foundation, and founder of GetOutOfDebt.org. His email message was brief: "In light of all the people out there that are facing debt problems now ... I wanted you to see this." The "this" turned out to be a story he wrote for his site. The story urges people to pay just the minimum on their credit cards.
From Rhode:Now, does this approach make mathematical sense? Absolutely not. The least expensive way to get out of debt is to pay down high interest rate debt first, but if you are doing that at the exclusion of saving you need to understand that the cost you will pay for not having emergency cash available, might be the loss of your home or the inability to eat.
So where are you going to get this cash to save? Well a recommendation in the Wall Street Journal suggested:
"But people without enough on hand right now may find it makes sense to borrow from their credit cards and put that money in a bank account. Sure they will pay a negative spread, borrowing at 12% and earning 1%. But they may figure that is the price of being prepared."
I don’t think I’d go that far but at the very least, only pay the minimum payments on your credit cards right now and not a dime more. Use the extra cash you would have sent above the minimum payment to put in your savings account.
Steve is not alone in this thinking. Suze Orman, the ubiquitous personal-finance author, has done an about face. Earlier this month, she wrote this: If you have an unpaid credit card balance and not much saved up in emergency savings I need you to listen up. My advice has changed.
I want you to only pay the minimum due on your credit card balance and instead make it your top priority to build as much of an emergency cash fund as you can.
Let me tell you why I am now telling you to do this. With rising unemployment, having a big emergency cash fund is vital, even if it means curtailing your credit card repayment strategy.
This is a major shift for Orman. She has always advocated a strategy of aggressively attacking credit-card debt. She now wants consumers, who do not have an emergency fund, to pay the minimum amount due on their credit cards and build up a cash-reserve fund of eight months.
Readers, help me out here. If someone doesn't have an emergency fund, with three to six months (or eight months if you're listening to Suze Orman) of cash that can be used for living expenses, does it make sense to pay just the minimum on credit-card debt that is accruing at 15% to 20%?
Read the two pieces and weigh in.
You can read Steve Rhode's piece here (link).
You can read Suze Orman's piece here (link).
UPDATE: Personal finance author Liz Pulliam Weston has also weighed in on this issue. Read her story here (link).
Thursday, March 19, 2009
Don’t Pay More Than The Minimum On Your Credit Cards
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Perhaps they are figuring that if you lose your job and can't find work for an extended period of time, you're not going to be paying credit cards anyway and will just default. I'm assuming they also advocate for those protection programs that credit cards are always hawking?
ReplyDeleteYour first sentence, I agree. That's probably what they're thinking. I sure hope they're not advocating using those card protection programs. I'll ask Steve Rhode, though. Would be very curious.
ReplyDeleteIt used to be that if you didn't have an emergency fund, but had plenty of credit, you could rely on that instead. With card issuers cutting lines and closing accounts left and right, one can't rely on that anymore. The solution, particularly if you are unable to clear the card debt in a short period of time, is to keep the extra cash you can, in case you lose your job.
ReplyDeleteClyde, so for people who don't have an emergency fund it's going to be a race. Can these consumers get the fund up and running before the issuers slash limits and close accounts? It could take a couple years before someone has amassed enough cash to fund expenses for six months.
ReplyDeleteI try to keep $1,000 emergency fund and apply everything else to credit debt. The more I pay off the cards, the lower the minimum payment will be in case of an emergency. I've worked for my employer for 19 years and will be eligible to retire in five years, which isn't much time to pay off $50K in unsecured debt.
ReplyDeleteMost people don't have the income to put several months of cash away in a short time, so here's some alternatives:
ReplyDeleteRight now I am debating whether to pay down my house insurance and car insurance (monthly payments for a 6 month term) instead of paying off credit cards. For a $650 on the two insurances, my monthly payments would go down $150 a month for the next several months. That's a cheap way to lower my monthly expenses.
In the event of a layoff, that would help.
Another thing you could do would be to pay the HOA a few months in advance. Monthly savings in case you get laid off, and you'll have to pay it sooner or later anyway. HOAs pile on the late fees and finance charges like nobody's business. Now they're short on funds due to foreclosures and chasing after homeowners all the time.
Different individuals may have certain other bills they could pay easily a few months in advance. It's not quite a cash cushion, but would help you make it on unemployment benefits if your monthly income dropped.
Also, put a few cases of soup and Spaghetti-O's (or the equivalent) in the pantry just in case.
Suze Orman is advising 8 months of cash that can be used to pay expenses. Anyone think that's realistic?
ReplyDeleteAnon, I think you're right. Most people don't have the income to put away a lot of cash in a short period of time.
No, I don't. If people had 8 months of cash available, their credit card balances would be zero. Bless her heart, I know she means well, but most people don't have her income. If you do have a good income now, then yes, sock it away.
ReplyDeleteI think 6 months of "normal living" expenses is plenty. Why did I use quotes? Because if you lose your job, you should not be living "normally."
ReplyDeleteEarly on when I got laid off, my wife and I went crazy. No cable, no cell phones, no extras of any kind. We eat on the cheap. And this was before she was working, so we were truly living off of savings. By the end of the first month, we realized we had cut our expenses nearly in half. While it might not have been comfortable, we could have survived a year at that level... longer counting unemployment.
I think it is all about survival at this point. Each situation is different but the goal now is to survive this crisis as much as possible. When a person is on the brink of losing their job, with no prospects or offers in the short term, and no savings is likely to default, therefore what is important here is how this person manages his\her affairs when -
ReplyDeletethey have no paycheck coming in
they max out unemployment benefits (taxable)
they have no savings
they have credit card debt
they lose their health insurance
You are NOT defaulting on your credit card by making the minimum payment, and although a high util ratio brings your score down no one should be looking into getting into new debt, or applying for more credit therefore creditscores take a step back. People can always find ways to fix their scores in the future when jobs come back. In the meantime you have to use your survival skills and ration money for what would be considered real priorities like your food and roof.
The only negative about this advice is that I think many people who live paycheck-to-paycheck are already paying the minimum and would continue to be unable to save nothing at all.
Right. You likely wouldn't have the debt issues -- unless your spending was out of control -- on the credit cards.
ReplyDeleteI'm not sure what I'd do if I was in that position. I'd probably try a hybrid approach. Work on a month of savings. Then attack debt. Work on another month of savings. Then attack debt the following month.
Anon@11:50am, good thinking. Credit scores should not be a primary thought for these people. Survival should be the first goal.
ReplyDeleteSpaghetti-Os? Yeech.
ReplyDeleteAm I the only one who thinks that this tactic will attract lots and lots of negative attention to you from your creditors? Nothing says Distressed Borrower better or faster than dropping to $18-per-month payments after a year of making $100-per-month payments.
I think you'll make yourself a high-priority target for getting your limits slashed AND getting your rate jacked.
Spooky, that's my thinking exactly. That's why I think it will be a race. See if you can get the necessary savings before you lose all of your available credit.
ReplyDeleteAnd you make a great point on the rate jacks. If you're at 15-20% on interest now, you could easily get to 29.99% if the card issuer thinks you're in financial distress -- which is what minimum payments might signal.
ReplyDeleteBy all means if you are less than 6-8 months away from paying off your credit card debt by making above min payments then I think you continue to pay above minimum. But if takes years to payoff, even while paying above mininum, then going the minimum route is probably the way to go temporarily until savings are accumulated. The way I look at it, since you are already paying high interest on a long term manner by switching to just the minimum all you are doing is extending the time element by just a bit (on a CC that will take years to payoff, even when paying above minimum). Hope this makes sense.
ReplyDeleteIt makes sense...if you recall Maslow's hierarchy of needs, physiological (food, sex, water, toilets) and safety (roof over head, etc) take the first.
ReplyDeleteWhen you're in dire straits and (temporarily) cash poor, interest rate does not matter. What matters at this point is whether you can put bread on the table and pay the rent. When paying extra on a CC means eating less, it's obvious what one should pick.
This issue catches people in the middle class who may have overextended but aren't outright insolvent, so there is still a credit score to protect for later, sunny days.
Chris wrote:
ReplyDelete"This issue catches people in the middle class who may have overextended but aren't outright insolvent, so there is still a credit score to protect for later, sunny days."
And I bet that's exactly who Suze Orman is thinking about. Ditto Rhode.
Haha funny, a minimum payment cardholder was every bank's dream just a few years ago.
ReplyDeleteWell, if people listen to Rhode and Orman, the issuers will be reliving the "glory" days.
ReplyDeleteAt the top of this thread, credit protection programs were mentioned. I never advocate them. They are a scam and rarely, if ever, provide more of a benefit than people could have gotten if they self-insured by saving money.
ReplyDeleteAs for protecting a credit score, I don't really care about that as a top priority. The number one priority has to be what are you going to do if your card limits are slashed and you find yourself on hard times.
More and more high income people are contacting me now for help with great incomes in the past but no cash in the bank now to save them when they need it most.
Think of a savings account as a financial bomb shelter.
Steve, thanks for weighing in.
ReplyDeleteThese articles are far too broad in their warnings. The group of people that this might apply to are extremely small. The advice to build up an emergency fund should come with a specific number of months. It might be nice to stick it to the credit card companies, but the interest rates are just too high to play that game.
ReplyDeleteIn my opinion, inflation is the real risk out there and a stash of emergency cash won't do you any good. If you can buy a garden or some gold bars on your credit card, that might be a good strategy.
It comes down to what should take priority - paying off credit card debt or having savings to fall back on. To me, it makes sense for anyone who doesn't already have an emergency fund to build up some level of reserves, even if it's not as much as the ideal three to eight months of living expenses. But, for the plan to work, you'd have to be just as aggressive with paying into an emergency fund as you were with paying off credit card debt, maybe more.
ReplyDeleteNo one wants to simply let their credit card balances remain stagnant for a few months, but consider the alternative of losing your job tomorrow and not having any savings to fall back on. You'd only have uncertain source of income and cash to rely on, including available credit which could get pulled at anytime, unemployment which you may not receive, or severance pay which you also may not receive. Chances are, in that situation, credit card payments would have to be put on hold anyway. Considering that, it makes sense to postpone debt payoff temporarily in lieu of an emergency fund.
Another reason to have a stash of cash is that you need $ to file for bankruptcy. I'm certainly not advocating that, but I'm assuming that a lot of people will be facing that option if they haven't already.
ReplyDeleteWe paid 3x the minimum on our credit cards and still our credit line was cut by more than 50% on Chase. Our income has risen to near six figures and that didn't make a difference either. So we are paying the minimum and socking away the 2x the payment amount into our online savings account.
ReplyDeleteGreat advice Steve Rhodes and Suze Orman.
CiifIcare
Whoa, hubby reminded me not only Chase but Amex as well.
ReplyDeleteCiIficare
CM,how many times I wrote you about maxing credit cards and pay just a minimum due.In this case you are safe from chasing ,decreasing and any other sort of adverse action.As you can see,I'm not alone with this strategy.
ReplyDeleteAnon, you were, apparently, ahead of the curve.
ReplyDeleteWhat I have not agreed with you on is this: maxing out cards.
You're getting some support in the minimum payment arena, though. Orman and Rhode agree with that strategy. I don't think they'd be willing to suggest you should max out the card.
Oh I was referring to AMEX and Chase getting skittish and raising the minimum payments on some borrowers or outright asking them to pay balances, whereas a few years ago, punishing min. payment payers was unheard of.
ReplyDeleteChris, thanks for the clarification. I see what you're saying now.
ReplyDeleteI have 2 washington mutual credit cards that without any notice raised both cards interest rates to 27% and the minimum on each is $170 and was going to be raised again so i closed them there is no way i can pay them.I had never been late or missed a payment i don't want to do this but they gave me no choice i have medical bills and medicine is $400 a month they screwed me and would not lower the rate we bailed the greedy crooks out a they didn't care how they treated their customers i wish they all had lost every dime they had.
ReplyDeleteCM,score is 640 something,but all credit cards money making money for me,and I'm safe,because I simply converted them to cash.
ReplyDeleteSuze's been recommending 8 months in an emergency fund since the last recession when that was about the amount of time it was taking for people to replace the jobs they'd lost. I don't know if there's a statistic on that figure these days, since no one seems to be replacing their jobs at the moment.
ReplyDeleteAlso, Suze has always skewed more conservative than most other personal finance authors. Partly because she targets women, who tend to be more conservative anyway.
Sure, this particular advice isn't for everybody. But those people to whom it doesn't apply will recognize that and move on. For those to whom it does apply, it even seems a little obvious. With credit card companies balance-chasing or closing accounts entirely, people in that situation have to still be able to buy food if they lose their jobs.
Also, I want to add my voice to the chorus of people horrified at the idea of people maxing out cards in a misguided attempt to preserve credit lines. This is NOT the strategy that anyone is recommending, and if that's what's being taken away, then more reading is necessary.
ReplyDeleteNot only will the utilization kill your credit score, but credit card companies can still slash your limit below your current balance. Good luck getting it back down before you trigger an overlimit fee and find yourself sucked in a whirlpool you can't get out of.
I don't understand the strategy in maxing the cards out, not in a million years and not at least while the credit card companies continue to hold 100% advantage or control over revising the contracts with cardholders. Similar to casinos the "house" has the advantage and therefore wins.
ReplyDeleteIf you're going to take on debt to fill your emergency fund, credit card debt is about the worst kind to do it with, because interest rates and limits can be changed at any time and revolving utilization has a large effect on credit scores. A cash out refinance of a mortgage would be much better. I just did a rate and term refinance (to 4.875%) and when they offered me cash out, I tookthe max cash out they would give me without increasing the rate or fees and added it to my emergency fund.
ReplyDeleteI've also sold household goods we didn't need on craigslist and through consignment shops, and added that to the emergency fund.
Other possibilities include borrowing against a paid-off car, getting a personal loan from a credit union, etc. In other words, if you're going to borrow to build the emergency fund, do it with fixed rate debt that amortizes over a period of years.
I wrote a little bit ago about the really high minimum and i am disabled and what can ido i don't care about fico score but if i can't pay it what will they do i really don't care but i wish the credit card companies would get what is due to how they have treated us where is the government are they to busy spending our money when will we get what we have earned i guess the big $13.00 will buy us a meal at Burger King.
ReplyDelete". A cash out refinance of a mortgage would be much better."
ReplyDeleteThis isn't true, as many are finding out today. Although the terms are better in some sense there is a very important sense in which its worse. When you take a home equity loan, or cash-out the loan is secured. If for whatever reason you can't pay it you're going to be on the streets. Whereas the same isn't true of credit cards. You are just trading one risk with another.
Cash-out refinancing is a pretty bad move financially.
Anyhow, I have been advocating that people should split their money between servicing debt and savings. A few years ago this wouldn't be necessary because if an emergency did occur while you were making the transition between debt slave to saver you could always get the money you've paid by accessing the line of credit again. But you can't rely on this anymore. Also, psychologically this seems to work better regardless of the economic environment.
But a general role doesn't really work, what you should do depends also on how much credit you have access to.
"If you can buy a garden or some gold bars on your credit card, that might be a good strategy."
ReplyDeleteOh damn, you forgot to mention guns and ammo. Maybe some fencing and barbed wire to protect the garden from nomadic raiders.
Cash out refinance isn't going to exist after April 1 for government backed mortgages (which at this point is essentially all of them).
ReplyDeleteI have paid off $8,000 in debt out of $25,000 in the past 8 months while amassing an emergency fund of $12,000 dollars
ReplyDeleteCurrent situation:
$17,000 debt
$12,000 emergency fund.
I have done this by paying the minimum payment on every single card in addition to everything I spend on the card that month.
I then take whatever money that is left over and attack the lowest card balance. I have done all this by cutting back about 90% of my spending, and only using the income from my payroll checks.
The $12,000 dollars in savings has come from EXTRA income such as tax refunds, gifts, selling stuff on ebay and craigs list, bonus checks, cash back rewards etc.
So basically I use payroll checks to pay off debt, and all extra non traditional income goes in savings.
The only way to truly pay off debt is to keep yourself motivated by paying minimums on everything and then attacking the smallest debt with the leftover (Dave Ramsey Plan)
For those of you who feel like you will never pay off your debt you really have to cut spending, its the impulse buying and eating at restauraunts that really breaks you, those 5-25 dollar puchases will eat you.
We're paying above the minimum on all our credit cards, and saving for emergencies. It's not easy, we have cut and cut our household expenditures. And we continue to cut! But to pay only the minimum on the credit cards would mean never being out of debt.
ReplyDeleteOur situation is a little different, because even though my husband works, he also has retirement pay. And I've figured that we need his job to pay the credit card bills, but can still keep a roof on over our heads and food on the table with just his retirement pay. So if worst comes to worst, the credit card companies will have to wait for their money. But if they have the sense to work with us on it, they will be paid eventually.
b_in_sc
Another complicating factor: Consider the case where someone is job hunting, but may need to have a credit report pulled as part of a job application (say, for government jobs). Emergency funds are essential, but at what point do you draw the line between saving and sabotaging your hireability - and thus future earning ability?
ReplyDelete(Not saying there's a single right answer here, just that one-size answers almost never fit all.)
I have to say advice on borrowing on a charge in favor of putting it in a savings account is stupid. You're more likely to trigger your existing creditors to take action as they see your balances rise and create a problem where one doesn't exist. Orman's advice of only paying the minimums is equally unwise. Sure if you can't afford to pay anything but the minimum you have no choice, but if you have extra cash flow even putting an extra $10-$50 per month towards your balances will cut down on the interest owed over the long term and will get you out of debt much faster.
ReplyDeleteI'll offer advice taking it one step further:
ReplyDeleteFirst, set up a Skype phone number and set all your credit card phone contacts to that number which you'll never pick up. This will avoid the annoying calls that will ensue in the next phase which is to immediately stop paying all credit card debts and send them all directly into default. Now. Do not fear the FICO or any other score as everything is about to hit the fan and no one will have a valuable credit rating for several years. When you have 6 - 12 months of cash and the employment numbers take a positive swing accept settlements of no more than 5% of the balance.
Paying the minimum is never a good idea. Your savings rate will always be lower than your interest you are paying out. However, if you have no savings then you should be paying less on your debt and more to yourself. I would advocate for still paying above minimum on any credit card with a high interest rate. Or, better yet, pay off any that you can and then allocate that freed up cash to savings from then on.
ReplyDeleteIf your interest rates are high - always pay as much as you can. But never forget to pay yourself first - how much worse will the situation be if you lose your job?
I can see the pros and cons of both sides. I think if every one just kept a log of every dime they spent for a few months and cut out some unnecessary items they would be able to pay more then minimum on cards and sock money away.
ReplyDeleteI think the point if the story was that if everyone gets a big CLD on one card the other issuers will follow and what are you going to do with a few $300 credit cards.
I don't think putting unsecured debt on a secured debt is ever a good thing. I have owned my home since 1993 and housing has dropped so low here that in another year I may be upside down and I never cased out.
My thoughts on this are in agreement with your friend and Suze. I've always advocated having an emergency fund, even while working on debt reduction because you just never know. In this case, while I think having 8 months or more is a good idea, I don't think neglecting your debts for that long is a good idea. I recommend the standard 3-6 months (though closer to 6) cash reserves and then start hitting your debts as hard as you can.
ReplyDeleteIn this economy with jobs that are difficult to come by, having an emergency fund is important. You're not going to be hacking away any debt if you're out of work and using what little money you have for bills. Then where would you be?
If you lost your job today, how would your budget change so that you can meet your obligations? Which "extra's" would you cut out to make this happen?
ReplyDeleteDefine those answers and cut those "extra's" now and put the rest into the emergency fund.
It'll take a formal, written, budget and it'll take sacrifice. It'll take commitment. And it can be done by most of us.
If you you were "forced" to do it due to lay off - you could. So "force" yourself.
God bless us all,
MelOsborne
CM;
ReplyDeleteDo you think the credit card companies will sit back and take this information of paying only the minimum on one's credit cards lightly? Won't they respond by raising the minimum payments from 2% to 4%, 5% or more to get even? I wonder what Suze meant when she said it's going to get worse out here with the credit cards...like we haven't seen anything yet. What's the next axe to fall?
I think it's high time that the banks tell us what they are doing with the bailout money that they received...in fact I think it would behoove them to not be so rash with the slashing of credit lines, raising APRs and closing accounts because the American people are resilent and will remember the names and faces of the guilty companies as charged. I don't think it's going to be business as usual anymore with people flocking back to credit card companies like before. The company that refuses to be so harsh on the American people will be the one that will survive. So far I don't see that company with the first letter of A, B, or C!!!! I know there have to be cutbacks but these companies slashing rates and not informing their customers ahead of time are the sneaky ones. Those I would never ever trust again.
An important thing also is the FICO scores of many have been lowered in many cases by no fault of the cardholder. It's going to take time to bounce back from there if you carry credit, but those of us who don't want credit cards anymore will be okay with our credit scores because we won't be carrying debt or a whole lot of it.
I had to get it all in CM, I know it may be deviating from the heading some!!
I feel those without any emergency funds who pay more than the minimum on their credit cards will lose twice if their lines are cut or their credit card account closed because the money they paid over the minimum will be gone and so will their available credit be gone as well.
CiifIcare
Ciif, not sure what the card issuers are going to do if someone suddenly (assuming there is a change in payment behavior) starts just paying the minimum. It's likely going to raise a red flag. But not sure if the card issuers will start raising minimums to reflect the perceived risk.
ReplyDeleteChase, as we saw late last year, raised minimum payments and started assessing a $10 monthly fee, on some customers who had taken advantage of "for-the-life-of-the-balance-transfer" promos. These customers, Chase said, were paying off balances too slowly.
So, you know that card issuers could resort to that if people start paying the minimum -- and they do it month after month.
Thanks for your response CM.
ReplyDeleteI really feel it comes down to a case by case basis. Everyone has to weigh their household situation and act accordingly.
If a person can only pay the minimum from month to month then they shouldn't be punished. There has to be food on the table. Putting aside some money and taking care of their bill also is acting responsibly. It's much better than not paying for sure!
CiifIcare
As I stated on CB, this isn't an either-or proposition for me. I'm paying down the little bit of debt I do have and saving at the same time. The only way I'd go to minimum payments on the CC is if I or my husband lost our jobs - then I'd have to pay the minimums. As it stands now, I'll stick with my current plan.
ReplyDeleteI am sorry, but did Suze Orman get some information that the rest of us don't have? Is the world economy going to collapse that we are being advised to develop an emergency cash fund? I belong to the group of people who thought they were knowledgeable but seeing the invisible hand of capitalism doing some bizarre things.
ReplyDeleteCredit Card balances %4769@ 10.99% minimum payment
ReplyDeleteback up card $350@ 2.99% until June when it goes to 18% (planning on paying it off by June)
In savings- $800 (I put a $100 in bi-weekly)
I'd like to build up my savings as I have a very secure job, but I don't have much in the way of an emergency fund.
I'm not sure if this will work, I am going to pay a little over 2.5 x times the monthly minimum for the time being as I am concerned about getting an emergency fund balance up.
"The company that refuses to be so harsh on the American people will be the one that will survive."
ReplyDeleteAdverse selection. The company that refuses to be so harsh will get all debt junkies and and their default rates will raise and they will likely collapse.
I must say that it has been interesting to watch this discussion on my original article.
ReplyDeleteI think that it all boils down to, if you don't have several months of cash easily accessible, without tapping an IRA or 401k, you need to.
Historically people have relied on access to credit cards in case of an emergency but as we are seeing, even people with good credit are getting their limits slashed.
Think about it like this, a tornado shelter is a terrible waste of money and a big expense. It makes no sense to have one, that is, unless you live in tornado country and want to prepare if the chances of a tornado coming are increasing.
If makes no sense to drop back and pay just the minimums if you already have an emergency cash fund in an online savings account. If you already have an emergency fund, disregard the advice.
But if you don't....think about it.
If you pay more than the minimums on your cash in lieu of a savings account and your income is impacted, you can't feed your family or pay bills with money you once had and sent off.
Steve
Hrmm, I'm not sure what to make of this.
ReplyDeleteAs of last November I had $25k in credit card debt (all moved onto a single citicard with an 8.99% APR and $27,500 limit, which was ratejacked to 14.20%). After the ratejacking I woke up and came up with a plan to put almost all my money into paying off my debt. That plan has had me paying off about $1900-2200 a month. Currently I'm at $17k, and still on pace to have everything paid off by August or September.
So far almost all of my money has been going into this. The only thing I'm still continuing with is $416/monthly payments into my Roth IRA.
My savings right now are hovering around $4,000 (and about $13k in a brokerage account), but my savings definitely aren't growing while I do this.
I really want to keep on this plan, as I want to get to a point where I don't have this massive debt over my head. But should I really consider doing what is suggested in these two articles...... leave my debt now where it is, and put all that money into an emergency fund instead? I don't really want to and I'm not planning to, but I'm still wondering. I feel fairly safe with my job as is right now (nothing is for sure, but the company is pretty stable, and it doesn't look like we'll need to do any layoffs/etc. any time soon).
Right now we are maxed out, 6 months savings gone and Amex said "bye" to us due to our shopping habits-Amazon, eBay and Walmart are not in their book of preferred vendors. Predatory lender is the reason. We would have paid off $45K and been done with almost all credit cards. I say almost because Home Depot and Sears are standards here where we live. Walmart supplies a lot of our groceries. That is it-but savings gone, refi not possible. Exploring options, but a mess is what we are, and what we are in. A sinking boat with too many holes to patch or bail.
ReplyDeletei owe 134000 on my mortgage at 6.75% and the house is worth around 175000...i have 13000 in credit card debt at 15%... does it make sense to refi with cash out paying off the credit cards leaving a mortgage of 155000 with all the fees at 5%..my payment would drop by 100 dollars and no more credit card debt..?
ReplyDelete