No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
Absolutely pay off everything without question. You will feel so good afterward, trust me. No one regrets paying off debt. Your interest is adding up to be a lot as well, youll be keeping a lot more money.
The cautious person in me says if you have it now pay it now. That little voice inside you is right. There is probably a reason you are thinking you should pay it off especially if you have the finances to make payments. It is alarming that there is no savings if you read a lot of the threads that is one of the key things that helps create issues with many members. No preparation for a rainy day.
If I were to make out a plan I would put up at least 4 - 6 months of total expenses as don't touch then pay down about 50% or more of the debt. Your score looks ok and with paying down the debt it would shoot up. The only thing is after you make your initial payments you are back to the monthly grind.
My best advice is go with what you think is best if i were to do that more I would not experience most of the issues I have.
Good Luck with what ever you decide and thanks for asking in forums.
If you don't anticipate cash flow needs, then I would pay everything off. However, if you think you might have a need or do not have a rainy day fund, I would Pay off the personal cards, 50% of the business cards, and put the rest into savings.
Some people would say to keep part of the payment as savings for a rainy day. However, I wouldn't recommend that. It would be costing you whatever amount you're paying in interest on the debt that could be paid with it. I would pay off the debts. If you do have a rainy day, use your credit card(s).
@Anonymous wrote:
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.
So you have another FT job?
What is the income because the debt to income ratio is what I cannot seem to find here?
What do you want to do with the money?
Is your goal to get fully out of debt?
Would you like to pay it down by 30 to 50% so that you can have some cushion into your future for rainy days or storms?
Would you like to invest and start to earn income or dividends on the $125K so that you can have a steady stream of taxable income in non-retirement investment portfolio? Would you like to use that income to pay off the debt while holding on to the principal of the say $100K, and have savings of up to 6 months in reserves with the rest?
Would you like to take a mental health day and allow yourself to spend $30 on a make at home steak dinner or vegan dinner, and just veg out and breath while you decide in 3 months or more when the divorce fog subsides?
Take your time! You did not get in this overnight. Make a plan so that you can get out and put together a budget that will allow you to pay everything off over a period of 3 to 5 years. Actually, $120K divided by $3.5K is less than 36 months either snowball or avalanche method, it is not important as long as the math works and you are ready to put a plan into motion.
@SouthJamaica wrote:
@Anonymous wrote: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!I would
1. pay the personal credit cards off
2. pay the Lightstream & SoFi loans down to 9% of the original loan amount
3. take what's left of the money, and lend enough of it to your company to enable it to pay off business cards 3 and 4
I agree with @SouthJamaica totally. I'm in a similar situation and can pay down $80K in debt this month. Myself personally, I don't want to keep paying high interest every month. Plus your score will shoot up quite a bit, if you follow what @SouthJamaica said to do.
OP,
It's been a while but what did you end up doing?
I am in a simlar situation albeit different in that I am still married, and while I have the funds to eliminate my $100k debt, my spouse demands that all of the accounts just go to pot (collections) to be settled for less. In the process of purchasing a home and the savings we've both contributed over the years is to be used as downpayment (recently came clean on all my debts). My issue of the interest being the #1 killer has made my now 3 year cumulative debt stagnant on decreasing and seeing positive results.
Think you should pay off as much as you can, but, do believe that if you could roll some of the debt into a 2% and under loan/BT card to buy you time to (1) transfer out the high APR cards to zero balances and (2) save some cash due to pandemic uncertainty, it should help with managing payment on the rest of the debt with a low interest fee, and have cash to spare. Again, my situation is different from yours and this is likely the approach I will seek to take as I don't want to lose 7 years to collection reportings and COVID is proving more and more inevitable to create a financial struggle with unemployment.
@ForumPheen wrote:OP,
It's been a while but what did you end up doing?
I am in a simlar situation albeit different in that I am still married, and while I have the funds to eliminate my $100k debt, my spouse demands that all of the accounts just go to pot (collections) to be settled for less. In the process of purchasing a home and the savings we've both contributed over the years is to be used as downpayment (recently came clean on all my debts). My issue of the interest being the #1 killer has made my now 3 year cumulative debt stagnant on decreasing and seeing positive results.
Think you should pay off as much as you can, but, do believe that if you could roll some of the debt into a 2% and under loan/BT card to buy you time to (1) transfer out the high APR cards to zero balances and (2) save some cash due to pandemic uncertainty, it should help with managing payment on the rest of the debt with a low interest fee, and have cash to spare. Again, my situation is different from yours and this is likely the approach I will seek to take as I don't want to lose 7 years to collection reportings and COVID is proving more and more inevitable to create a financial struggle with unemployment.
In addition to letting your credit go to crap before you can even negotiate a settlement, you will be 1099ed for any debt forgiveness. So if you settle for $50K, the other 50K will be considered income. So it's not really a good deal.