topic Re: Employee owned stocks in General Credit Topics

Employee owned stocks

Anonymous — Mon, 04 Aug 2008 02:44:34 GMT

I have $100,000 in dept at average of 17% interest. I have $100,000 in an employee owned stock trust. should I cash, pay the taxes and be out of debt or should I take out a low interest loan or can I?? Not sure what my options are. Have a 639 fico but can' get a consolidation loan because of my ratio is bad?? thought that is why you get a consolidation loan?? Any advice would be much appreciated. BBWOLF5

Re: Employee owned stocks

llecs — Mon, 04 Aug 2008 13:59:22 GMT

Unless your stock is growing over 17% per year, I would cash it out. Not doing so would mean you are losing money.

Also, investing with the employer isn't always best. Besides skewing your asset allocation (assuming some sort of matching plan led to this) being in the inside doesn't guarantee future performance. Enron is a great example of that. People had no clue until they showed up at their office only to find the doors chained. A more recent example is Bennigans restaurants. Last week, people showed up to work to find all the restaurants closed. These companies and more have employee stock plans. If they put their nest egg with their company, they'd find one or more eggs cracked.

Message Edited by llecs on 08-04-2008 09:59 AM

Re: Employee owned stocks

RobertEG — Tue, 05 Aug 2008 06:19:26 GMT

Yo! Good question!

First question, IMHO, is your long term goal. FICO scoring is not the same financial planning.

Your stock assets, just as bank accounts, IRAs, etc, do not enter into FICO scoring. Father FairIssac does not care about them in your FICO scoring. So if you take assets not scored by FICO and apply them to FICO-scored debt, such as reported installment or revolving credit TLS, you will definately get a FICO score boost

But FICO score is not the begin or end all in financial planning or in credit decision making. If you plan to apply for additional credit in the near future, your creditor may look not only at your FICO score, but at your ratio of debts to assets, and your assets will drop if you cash the stock.

No simple answer, good buddy, unless you are looking only for a FICO boost.