Finally paying off credit cards... What should I do next?

[Anonymous]

Hey guys,

So, I've had this revolving credit card debt of around $35k for the last 2-3 years, and have only been making minimum payments, but I recently got a new job and knocked out $15K this year, and a family member is letting me borrow $20K to pay off the rest in full.

I have 12 credit cards, ranging from $1,000 to $6,000. I know it's a very broad and open ended question, but my question to you guys is - what should my next steps be as far as my credit goes (besides paying my family member back)? Eventualllllly, I want to start investing in property if that can give you guys a starting point. 

[Anonymous]

Did you establish a payment plan with your family member? Once you solidify that, then you can see what your options are going forward. 

Its best to do that first and then make sure you can cover the payments to the family member every month. With that amount of money borrowed and depending on who that family member is, it might be a good idea to get the terms in writing.

As for credit cards, continue to use your cards and pay in full each and every month. Have an emergency fund established for more reasons than so you won't need to carry balances anymore, even in rough months. Determine what's left over after all of your financial commitments are paid each month. As for WHAT to invest in, that's up to you based on how risk adverse you are. That question is tough to answer here as it takes a lot more assessment of your goals,  finances, investment period, etc.

[Anonymous]

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@Anonymous wrote:

Did you establish a payment plan with your family member? Once you solidify that, then you can see what your options are going forward. 

Its best to do that first and then make sure you can cover the payments to the family member every month. With that amount of money borrowed and depending on who that family member is, it might be a good idea to get the terms in writing.

As for credit cards, continue to use your cards and pay in full each and every month. Have an emergency fund established for more reasons than so you won't need to carry balances anymore, even in rough months. Determine what's left over after all of your financial commitments are paid each month. As for WHAT to invest in, that's up to you based on how risk adverse you are. That question is tough to answer here as it takes a lot more assessment of your goals,  finances, investment period, etc.

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Thanks for the tips! Yes, we got the payment plan in writing, and figured out something that fits my budget enough to cover my expenses and still have a little savings left over. 

May I ask, I see you have a pretty big credit line - what's the purpose of your credit line? Like, initially, I wanted to do it just to be able to say I had it and it seemed like a fun goal - but now, I want to see how I can utilize having a credit line like that in my favor besides just having spending power.

[Anonymous]

Well, it provides a lot of flexibility in terms of accumulating rewards, although I don't always try to maximize rewards. It provides flexibility for short-term financing, but for no longer than the grace period provides. I can use one of my cards that will give me time before I'll need to pay in full. As an example,  I just used a card to pay for something that had just closed its billing cycle 5 days before, so that I can put an additional $1K into the market, because the market was at a very good buy point. And I did that at the end of last month, using card float to fund it without drawing from savings to do so. I've done that for years and that makes a difference over time. Having a full set of cards gives me options.

The credit line itself isn't something that is completely necessary, but they've grown on their own and I've grown them through CLI requests. Its good for padding utilization or in some cases to earn interest. Back in the 2006 to 2008 timeframe, it was a nice moneymaker. I would be able to get direct deposit cash advances at 0% and no transaction fees for the majority of my credit line and earn 5% interest on that money, then pay in full when the term ended. But those days are gone. 

[Anonymous]

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@Anonymous wrote:

Well, it provides a lot of flexibility in terms of accumulating rewards, although I don't always try to maximize rewards. It provides flexibility for short-term financing, but for no longer than the grace period provides. I can use one of my cards that will give me time before I'll need to pay in full. As an example,  I just used a card to pay for something that had just closed its billing cycle 5 days before, so that I can put an additional $1K into the market, because the market was at a very good buy point. And I did that at the end of last month, using card float to fund it without drawing from savings to do so. I've done that for years and that makes a difference over time. Having a full set of cards gives me options.

The credit line itself isn't something that is completely necessary, but they've grown on their own and I've grown them through CLI requests. Its good for padding utilization or in some cases to earn interest. Back in the 2006 to 2008 timeframe, it was a nice moneymaker. I would be able to get direct deposit cash advances at 0% and no transaction fees for the majority of my credit line and earn 5% interest on that money, then pay in full when the term ended. But those days are gone. 

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Wow, thanks a bunch for the insight. It seems like there are a bunch of ways to utilize credit in your favor that I'm not aware of, and I want to start looking into that. The days of me wanting to max out my cards and pay the min are long gone - hooopefully hahaha