Help with debt/improving credit

[Qdao823]

Hi MyFico Family!

This forum has helped me so much in the past.  I'd like some more help now that I have accumulated a lot of debt.  I would like advice on how best to tackle this.  I have credit cards, HELOC, personal loans. I also have approx 90K in student loans (currently in deferment bc I am in graduate school for my doctorate). I also have a HELOC 100K but low interest and paying approx 600 monthly. Should I close accounts, open new lines to pay down?  Take out a student loan and pay off large portion of credit cards? I don't know where to start.  I make a decent amount of money and can pay down cards slowly but I want to avoid the high interest rates it seems I am paying so much money monthly.  Thanks in advance!  See below, 

Amazon prime visa- CL 8300 bal 5500 min due 472 apr 23%

Sapphire Chase- CL 16000 bal 15187 min due 429 apr 21%

United Explorer - CL 21200 bal 23367 min due 743 apr 25%

USC Mastercard- CL 5K bal 1375 min due 10 apr 18%

USC personal loan 4500 interest rate 11.49%

Sofi personal loan balance 24834 int rate 12.56%

[SlideOrInsert]

> I would like advice on how best to tackle this.

from what you have listed, you are at least a quarter mil in debt.  the advice would be to live frugally and dump-truck that "decent amount of money" on the highest interest debt first.  if by some means (loans, balance transfers, etc) you can lower the interest rates on the four credit cards, that will help with your hemorrhaging interest, but you are still a quater mil in debt, even maxed out on a couple accounts.

	apr	limit	bal	int $ /mo	util
amazon prime	23	8300	5500	105	66
sapphire chase	21	16000	15187	266	95
united explorer	25	21200	23367	487	110
usc mastercard	18	5000	1375	21	28
usc loan	11	--	4500	43	--
sofi loan	13	--	24834	260	--
studen loan			90000
heloc			100000
TOTAL			264763	1182

your credit score might not be bad, but your debt to income might be unfavorable to qualify for loans, balance transfers, etc.

[Qdao823]

Would your advice be to take out a

student loan at a lower interest rate to help consolidate th larger credit card balances?? 

[markbeiser]

All I can say is that I hope whatever you are getting your PhD in pays a LOT!

[Citylights18]

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@Qdao823 wrote:

Would your advice be to take out a

student loan at a lower interest rate to help consolidate th larger credit card balances?? 

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I think you have to think about it in terms of productive debt vs. unproductive debt. 

The first 4 credit cards are $45,429. I would try to knock those out because if you run them up high that is what is going to take you down, not the HELOC or the student loan. The HELOC debt goes away (likely) if you sell the house which is appreciating. Student Loan payments can be stretched out.

I owe about 217k myself with 75k credit card or credit line. But most of it is productive debts like a HELOC, 401k loan and a business loan. Actually one option that might make sense for you is a 401k loan if you have that at your disposal to knock out the credit debt. If the situation is you only have enough to take out a 25k 401k loan that would knock out most of your CC debt. Then you are paying the interest on the 401k loan back to yourself.

Tacking onto the student loan, I don't know what your overall financial picture is but I probably wouldn't recommend that unless you can get a better interest rate as part of the deal. A 401k loan would have a high interest rates but that goes all back to yourself so you can dial back your retirement contribution to the company match while doing so. $450 a month maybe to handle a 25k 401k loan with a term of 60 months?

There is also the question of how much do you think you need to have in an emergency fund. If you have that emergency fund maxed out you can focus all of your attention on the CC. I decided to save up few hundred grand first and if I make money on it direct to the CCs. HELOC on a second home I've tried to put off as long as possible because of the interest rate environment.

The thing with the 401k loan people tell you never to take that out because of retirement but many people never burn through theirs. The max a loan can even be is 50,000 so there is a limit to how much it can hurt your future growth.

[Qdao823]

@Citylights18 Thanks so much for the info! It's super helpful. The student loan would be much lower interest rate and I can spread it out. I was going to try to take out maybe 20K just to take care of most of the CC debt for now and pay it back at the end. It's spread out as well so it would give me time to pay back .  I don't have the option to take out 401K loan because I already did that. I have a second home that I considered possibly selling to take care of some debt but it's making me money currently so it's a great investment to hold onto. I was thinking maybe taking a HELOC on this but don't know if that's a great idea. 

[Citylights18]

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@Qdao823 wrote:

Hi MyFico Family!

This forum has helped me so much in the past.  I'd like some more help now that I have accumulated a lot of debt.  I would like advice on how best to tackle this.  I have credit cards, HELOC, personal loans. I also have approx 90K in student loans (currently in deferment bc I am in graduate school for my doctorate). I also have a HELOC 100K but low interest and paying approx 600 monthly. Should I close accounts, open new lines to pay down?  Take out a student loan and pay off large portion of credit cards? I don't know where to start.  I make a decent amount of money and can pay down cards slowly but I want to avoid the high interest rates it seems I am paying so much money monthly.  Thanks in advance!  See below, 

Amazon prime visa- CL 8300 bal 5500 min due 472 apr 23%

Sapphire Chase- CL 16000 bal 15187 min due 429 apr 21%

United Explorer - CL 21200 bal 23367 min due 743 apr 25%

USC Mastercard- CL 5K bal 1375 min due 10 apr 18%

USC personal loan 4500 interest rate 11.49%

Sofi personal loan balance 24834 int rate 12.56%

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You're spending $1654 on 4 cards (45k+) a month when you could knock those out with a $900 a month 401k loan. Then dial make to just making the 401k employer match.

Then drive down the personal loans with payments or consider the student loan idea.

[SouthJamaica]

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@Qdao823 wrote:

Hi MyFico Family!

This forum has helped me so much in the past.  I'd like some more help now that I have accumulated a lot of debt.  I would like advice on how best to tackle this.  I have credit cards, HELOC, personal loans. I also have approx 90K in student loans (currently in deferment bc I am in graduate school for my doctorate). I also have a HELOC 100K but low interest and paying approx 600 monthly. Should I close accounts, open new lines to pay down?  Take out a student loan and pay off large portion of credit cards? I don't know where to start.  I make a decent amount of money and can pay down cards slowly but I want to avoid the high interest rates it seems I am paying so much money monthly.  Thanks in advance!  See below, 

Amazon prime visa- CL 8300 bal 5500 min due 472 apr 23%

Sapphire Chase- CL 16000 bal 15187 min due 429 apr 21%

United Explorer - CL 21200 bal 23367 min due 743 apr 25%

USC Mastercard- CL 5K bal 1375 min due 10 apr 18%

USC personal loan 4500 interest rate 11.49%

Sofi personal loan balance 24834 int rate 12.56%

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Welcome to the forum.

1. No you shouldn't close anything and no you shouldn't open anything new.

2. No need to do anything with your loans, just keep paying them down.

3. As to your revolving accounts I would use the snowball method:

1. Stop using cards.
2. Pay off smallest balance first, then next smallest, and so on.
3. On other cards pay minimum + something each month.
As each balance turns to zero, that will free up your remaining monthly cash to apply to the next smallest balance.

[Kforce]

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@SouthJamaica wrote:

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Welcome to the forum.

1. No you shouldn't close anything and no you shouldn't open anything new.

2. No need to do anything with your loans, just keep paying them down.

3. As to your revolving accounts I would use the snowball method:

    1. Stop using cards.
    2. Pay off smallest balance first, then next smallest, and so on.
    3. On other cards pay minimum + something each month.
        As each balance turns to zero, that will free up your remaining monthly

       cash to apply to the next smallest balance.

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^^^^ This

No new cards or loans.

Need to attack paying off credit cards first

[KatzNDawgs]

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@SouthJamaica wrote:

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Welcome to the forum.

1. No you shouldn't close anything and no you shouldn't open anything new.

2. No need to do anything with your loans, just keep paying them down.

3. As to your revolving accounts I would use the snowball method:

1. Stop using cards.
2. Pay off smallest balance first, then next smallest, and so on.
3. On other cards pay minimum + something each month.
As each balance turns to zero, that will free up your remaining monthly cash to apply to the next smallest balance.

---

Agree to most of this, though I would personally avalanche and tackle higher interest CC's first. But either way works.

As for student loans - I would say only if you can get federal GradPlus loans through studentaid.gov - I would not go with a private lender. Once out of deferment, make sure to get an IDR (Income Driven Repayment) plan, and if you are willing to take a lower paying job for a bit in your field you can always consider a PSLF (Public Service Loan Forgiveness) which is 10 years at eligible employment. So, places like a public university if you want to go for post-doc there will also count.