$120,000 in credit card debt - Need advice

[Anonymous]

Hello. I have $120,000 in unsecured debt. ($70,000 in my name, and $40,000 to my S Corp, which I'm the sole owner of, and occasionlly use for freelancing).

Next week, I'm getting a check for $125,000 as part of my divorce agreement. (Got divorced in 2019)

Should I immediately take that $125,000, and pay off everything? I'm not sure if there are options I'm not thinking of. 


Here's how it breaks down:



Personal

- Credit card 1 - 12.4% - $15,000

- Credit card 2 - 15.24% - $3,000 
-
- SoFi personal loan - 10.81% - $27,000
- Lightstream personal loan - 8.24% - $25,000

- Total: $70,000
*updated* (I have $12,000 credit line left on these personal accounts combined) 


Business
-
- Credit card 3 - 29.24% - $20,000
- Credit card 4 - 27.99% - $22,000

- Credit card 5 - 15.24% - $8,000

- Total: $50,000

*updated* (I have $4,000 credit line left on these business accounts combined) 

Other factors

- I've never declared bankruptcy

- My credit score is decent (715)
- *updated* I have no savings built up
- *updated* I'm current on all my accounts. It's about $3,600/month to service it all. Ugh.

Thank you in advance for any advice!

[AllZero]

I would imagine paying off debt is a good thing. I don't see a downside.

[Red1Blue]

How much do you have in savings for the Rainy Day ? I do not know your financial situation. If I were you, I would stash away 50% of the money into savings and remaining into business and credit. As long as you dont have any defaults on your credit accounts try to manage things as usual. Savings and savings is the key word in todays economy until the Covid-19 issue resolves. 

[Anonymous]

Thanks, AllZero

[Anonymous]

Thanks for the reply, @Red1Blue! To answer your questions,
- I don't have any savings built up. 
- Yes, I'm current on them all. No defaults. It's about $3,600/month to service! Ugh.

---

@Red1Blue wrote:

How much do you have in savings for the Rainy Day ? I do not know your financial situation. If I were you, I would stash away 50% of the money into savings and remaining into business and credit. As long as you dont have any defaults on your credit accounts try to manage things as usual. Savings and savings is the key word in todays economy until the Covid-19 issue resolves. 

---

[recoveringfrombk7]

---

@AllZero wrote:

I would imagine paying off debt is a good thing. I don't see a downside.

---

+1

As long as you have income + some savings carrying debt and paying interest on it never a great idea.  If we knew the limits on your cards that would help guide advice.  Might make sense to bring your scores up with selective paydown and consider a 0% BT if you need to hang onto some of the money.

[Red1Blue]

---

@Anonymous wrote:

Thanks for the reply, @Red1Blue! To answer your questions,
- I don't have any savings built up. 
- Yes, I'm current on them all. No defaults. It's about $3,600/month to service! Ugh.

---

 I do not know your business or cash flow needs for your business or your income situation. My advice, try to conserve as much cash as possible into savings. Hang on to cash for next 12-18 months until the economy turns around. That is my suggestion. Savings, Savings, Savings that is the key word.

[recoveringfrombk7]

---

@Red1Blue wrote:

---

@Anonymous wrote:

Thanks for the reply, @Red1Blue! To answer your questions,
- I don't have any savings built up. 
- Yes, I'm current on them all. No defaults. It's about $3,600/month to service! Ugh.

---

 I do not know your business or cash flow needs for your business or your income situation. My advice, try to conserve as much cash as possible into savings. Hang on to cash for next 12-18 months until the economy turns around. That is my suggestion. Savings, Savings, Savings that is the key word.

---

Carrying interest accruing debt to hold onto savings doesn't accomplish much besides costing you more money and making you financially vulnerable.  If the cards are paid down that money is still available for use in case of emergency, especially if OP has been paying on time/has no derogs.

[Anonymous]

---

As long as you have income + some savings carrying debt and paying interest on it never a great idea.  If we knew the limits on your cards that would help guide advice.  Might make sense to bring your scores up with selective paydown and consider a 0% BT if you need to hang onto some of the money.

---

I have $12,000 credit line left on my personal accounts, and just $4,000 on the business cards. Thanks.

[Anonymous]

---

 I do not know your business or cash flow needs for your business or your income situation. My advice, try to conserve as much cash as possible into savings. Hang on to cash for next 12-18 months until the economy turns around. That is my suggestion. Savings, Savings, Savings that is the key word.

---

My business is slow. It's a digital design company, and I mostly just use it for freelance gigs. I make a little bit from it, but not much. Thanks.