Using income tax to pay down CC debt?

[WallyxD]

Hey guys, I'm currently in the process of filing my taxes, and so far I'll be getting around 1.5k back.  I have about 4.5k in credit card debt (helping people out and going crazy when the cards were first opened), and my savings account is also depleted.  I figured it'd be a no brainer to use all of my income tax to pay down my debt, but I have absolutely no type of cushion due to me having pretty much nothing in my savings account, which has been making me uncomfortable.  What would you guys suggest I do?  If need be, I can provide my CC balances and interest rates so that you guys can give suggestions as to what exactly to pay off.  Also, how do you guys feel about me taking out a personal loan as a way to consolidate my remaining debt?

[k-s]

If your debt is on cards without a 0% promo and you are employed (ie, bringing in more income each month), I would say absolutely pay off as much debt as you possibly can. Savings is great and all, but you can save up more later if you're not paying the interest on those cards now. I wouldn't keep cash in the bank (where it earns either nothing or a very minimal return) when I could be effectively making 10-25% on that money by just paying off the debt before it accrues interest. I would also recommend that you evaluate your finances and see what you can do to start paying down the rest of that debt aggressively. The tax return will take you down to just 3k in debt and depending on your income, that is an amount that you could probably get paid off very quickly if you really watch your money. 

Best of luck!

[efranklin23]

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@WallyxD wrote:

Hey guys, I'm currently in the process of filing my taxes, and so far I'll be getting around 1.5k back.  I have about 4.5k in credit card debt (helping people out and going crazy when the cards were first opened), and my savings account is also depleted.  I figured it'd be a no brainer to use all of my income tax to pay down my debt, but I have absolutely no type of cushion due to me having pretty much nothing in my savings account, which has been making me uncomfortable.  What would you guys suggest I do?  If need be, I can provide my CC balances and interest rates so that you guys can give suggestions as to what exactly to pay off.  Also, how do you guys feel about me taking out a personal loan as a way to consolidate my remaining debt?

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You need to provide more info like the Util for each card. But to get started, I would start by saying you need to have some money in your savings account. We can't help until we have more info. At this moment, I would avoid type of loan until you paid your debt down to a comfortable level (under 10%)

[WallyxD]

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@k-s wrote:

If your debt is on cards without a 0% promo and you are employed (ie, bringing in more income each month), I would say absolutely pay off as much debt as you possibly can. Savings is great and all, but you can save up more later if you're not paying the interest on those cards now. I wouldn't keep cash in the bank (where it earns either nothing or a very minimal return) when I could be effectively making 10-25% on that money by just paying off the debt before it accrues interest. I would also recommend that you evaluate your finances and see what you can do to start paying down the rest of that debt aggressively. The tax return will take you down to just 3k in debt and depending on your income, that is an amount that you could probably get paid off very quickly if you really watch your money. 

Best of luck!

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All of my debt is on cards without a 0% promo.  I do work part time as a cashier on the weekends, but I am also a full time student and am a virtual intern (unpaid), so my working availability is pretty limited for the time being; so my income is only hovering around 9-10k.  There is an opening at the place where both of my roommates work (4 pm to 2 am) that I am considering, but I'm worried of that getting in the way of my school work and internship work.  I'll take some time out of my day tomorrow to see what I can do about my finances in the meantime, thank you for your help!

[WallyxD]

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@efranklin23 wrote:

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@WallyxD wrote:

Hey guys, I'm currently in the process of filing my taxes, and so far I'll be getting around 1.5k back.  I have about 4.5k in credit card debt (helping people out and going crazy when the cards were first opened), and my savings account is also depleted.  I figured it'd be a no brainer to use all of my income tax to pay down my debt, but I have absolutely no type of cushion due to me having pretty much nothing in my savings account, which has been making me uncomfortable.  What would you guys suggest I do?  If need be, I can provide my CC balances and interest rates so that you guys can give suggestions as to what exactly to pay off.  Also, how do you guys feel about me taking out a personal loan as a way to consolidate my remaining debt?

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You need to provide more info like the Util for each card. But to get started, I would start by saying you need to have some money in your savings account. We can't help until we have more info. At this moment, I would avoid type of loan until you paid your debt down to a comfortable level (under 10%)

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Here are my balances (odd interest rates, I know):

AE Visa: $1780/2300 23.99%

AE Store Card: $23/700 24.99%

Chase Amazon: $470/500 22.24%

Citi: $1335/1500 13.74%

CapOne: $630/1200 19.80%

Walmart: $360/1350 22.90%

Paypal SC: $180/300 26.99%

And I only considered taking out a loan so that I'll only have one payment per month to make instead of making 7 individual payments per month, I thought it was a good idea lol.

[notfancy]

If you're only working 2 days a week, this might spell financial disaster for you quickly if you don't find a way to take some steps to improve the situation.

I would not jeopardize your schooling or internship, but can you pick up even one more shift? Do you have other bills aside from the credit cards?

You don't want to be squeaking by paying only the minimums. Do you have family that can assist you? If you lose your job or they cut  your hours, will you be able to meet your financial obligations? What are your current balances, limits, aprs? I would suggest using cash / debit right now and pay off as much of your debt as possible. You can work on your savings once your debt is at more comfortable levels.

[Creditaddict]

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@WallyxD wrote:

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@efranklin23 wrote:

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@WallyxD wrote:

Hey guys, I'm currently in the process of filing my taxes, and so far I'll be getting around 1.5k back.  I have about 4.5k in credit card debt (helping people out and going crazy when the cards were first opened), and my savings account is also depleted.  I figured it'd be a no brainer to use all of my income tax to pay down my debt, but I have absolutely no type of cushion due to me having pretty much nothing in my savings account, which has been making me uncomfortable.  What would you guys suggest I do?  If need be, I can provide my CC balances and interest rates so that you guys can give suggestions as to what exactly to pay off.  Also, how do you guys feel about me taking out a personal loan as a way to consolidate my remaining debt?

---

You need to provide more info like the Util for each card. But to get started, I would start by saying you need to have some money in your savings account. We can't help until we have more info. At this moment, I would avoid type of loan until you paid your debt down to a comfortable level (under 10%)

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Here are my balances (odd interest rates, I know):

AE Visa: $1780/2300 23.99%

AE Store Card: $23/700 24.99%

Chase Amazon: $470/500 22.24%

Citi: $1335/1500 13.74%

CapOne: $630/1200 19.80%

Walmart: $360/1350 22.90%

Paypal SC: $180/300 26.99%

And I only considered taking out a loan so that I'll only have one payment per month to make instead of making 7 individual payments per month, I thought it was a good idea lol.

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I would go check with prosper.com and lendingclub.com (they are basically the same but both pull a different report... SP. so don't worry)

If that's a no I would BT walmart and paypal to cap1 and then use tax refund to pay chase and AE store and maybe a couple hundred of AE visa and put at least $1k into savings for backup to feel a little safer... then start working on paying it all down and not using.

if you can get a personal loan for at least $3k you could probably get a few of these extreme high interest cards paid off and feel like your payments are doing more.

[SunriseEarth]

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@WallyxD wrote:

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@efranklin23 wrote:

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@WallyxD wrote:

Hey guys, I'm currently in the process of filing my taxes, and so far I'll be getting around 1.5k back.  I have about 4.5k in credit card debt (helping people out and going crazy when the cards were first opened), and my savings account is also depleted.  I figured it'd be a no brainer to use all of my income tax to pay down my debt, but I have absolutely no type of cushion due to me having pretty much nothing in my savings account, which has been making me uncomfortable.  What would you guys suggest I do?  If need be, I can provide my CC balances and interest rates so that you guys can give suggestions as to what exactly to pay off.  Also, how do you guys feel about me taking out a personal loan as a way to consolidate my remaining debt?

---

You need to provide more info like the Util for each card. But to get started, I would start by saying you need to have some money in your savings account. We can't help until we have more info. At this moment, I would avoid type of loan until you paid your debt down to a comfortable level (under 10%)

---

Here are my balances (odd interest rates, I know):

AE Visa: $1780/2300 23.99%

AE Store Card: $23/700 24.99%

Chase Amazon: $470/500 22.24%

Citi: $1335/1500 13.74%

CapOne: $630/1200 19.80%

Walmart: $360/1350 22.90%

Paypal SC: $180/300 26.99%

And I only considered taking out a loan so that I'll only have one payment per month to make instead of making 7 individual payments per month, I thought it was a good idea lol.

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Looking into a consolidation loan isn't a bad idea if you can get a favorable rate.   However, given that so many of your CCs are practially maxed out, you might only be able to get one of those high APR loans.  I'd say it will also be difficult at this point to get CLIs or any good BT offers.  So the best plan would be just to pay on the debt and not accumulate more. 

I'm also going to disagree with those who say you need savings as a buffer.  You could use your CCs as an emergency buffer, instead of having the CCs eat up your money in interest.  So my advice would be to pay down the major CCs.  If I were you, I'd pay off the Chase Amazon and then put the rest on AE Visa, and then SD those CCs, unless you have an emergency.   Then work on a plan that would allow you to pay more on your debt (cutting expenses, increasing income, etc).

[notfancy]

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@WallyxD wrote:

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@efranklin23 wrote:

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@WallyxD wrote:

Hey guys, I'm currently in the process of filing my taxes, and so far I'll be getting around 1.5k back.  I have about 4.5k in credit card debt (helping people out and going crazy when the cards were first opened), and my savings account is also depleted.  I figured it'd be a no brainer to use all of my income tax to pay down my debt, but I have absolutely no type of cushion due to me having pretty much nothing in my savings account, which has been making me uncomfortable.  What would you guys suggest I do?  If need be, I can provide my CC balances and interest rates so that you guys can give suggestions as to what exactly to pay off.  Also, how do you guys feel about me taking out a personal loan as a way to consolidate my remaining debt?

---

You need to provide more info like the Util for each card. But to get started, I would start by saying you need to have some money in your savings account. We can't help until we have more info. At this moment, I would avoid type of loan until you paid your debt down to a comfortable level (under 10%)

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Here are my balances (odd interest rates, I know):

AE Visa: $1780/2300 23.99% 77% UTL

AE Store Card: $23/700 24.99%  3% UTL

Chase Amazon: $470/500 22.24%  94% UTL

Citi: $1335/1500 13.74%  89% UTL

CapOne: $630/1200 19.80% 53% UTL

Walmart: $360/1350 22.90% 27% UTL

Paypal SC: $180/300 26.99% 60% UTL

TOTAL: 4778/7850 61% UTL

And I only considered taking out a loan so that I'll only have one payment per month to make instead of making 7 individual payments per month, I thought it was a good idea lol.

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I would at least pay off the small charge on the AE card, and try to get all of your balances under 60% UTL.

A lender looking at your report seeing 80-90% UTL will consider those accounts maxed and you as a credit risk, which could possibly lead to adverse actions, such as account closure (rare), credit limit decreases, higher aprs, denial of credit, etc. With having a balance on every card you have, and many of them close to their limits, you  will probably get denied if you apply for a loan, even if it is to consolidate your debt.

Spend the $203 to pay off the AE and Paypal accounts.  You could potentially pay off your Paypal, Chase,  Walmart and Cap 1 accounts, but that would still leave you near maxed out on your AE visa and Citi... so either way that isn't going to help you out a ton, which is why I suggested at least getting your balances down to at least 60% or lower.

[Leadberry]

If possible, can you take out a student loan to pay off your cards? A Stafford loan would be deferred until after graduation and the government would pay the interest if it's subsidized. IMO, it's your best option.