The Finances and Debt Thread

[FiveThous]

Anyone here in retail banking? I had a question I'd like to DM you if so

 

[Hurl Bruce]

Credit Karma caught up with me paying off my car loan with a credit card and now lists me at about 27k in credit card debt. Took almost a 100-point dive in my credit score overnight.

Despite having about $7,000 in bills this past month, I somehow paid it all off. Managed to make minimum payments on all of the credit cards that are either on very low interest or no interest right now, rent, car insurance, school loans, and a $5,400 credit card statement bill for my credit card I pay everything with and always pay off on top of still saving my normal 5% Roth 401k for company match and doing my normal tithe. My bills for May are to be even worse because of a $2k tax bill, $700 in government fees for my wife's 10-year green card, and a credit card statement bill that is already over $4k and will be closer to $5k by the end of april due to having to pay another $670 to fix my Subaru's exhaust that got clogged from three turbos dying and spitting metal fragments into the catalytic converter. Depending on how long it takes for me to get my Subaru back, I might be able to delay payment on it until the next credit card statement rolls around so that I can pay that bill in June.

My bills in June should be not quite normal, but much better. My wife's windshield has a full-length crack in it, so we're replacing it in late April for $275 (would allow me to pay it off in late June). The last major repair on the Audi I recently bought that shouldn't go too long without doing is the exposed boots on the axle shafts, which is probably doing to be quite expensive (possibly over a grand). I might do that sometime in May, but I may wait a month or two just to catch up a little bit as long as my mechanic thinks it will be ok.

I know this sounds all crazy, but a lot of it is just debt moving around, and the sale of the Subaru will totally cancel out both the purchase of the Audi and all of its repairs combined, bringing me right back down to a total of $20k credit card debt as opposed to 11k in car loans and 9k in credit card debt. It just sucks that a $2k tax bill, $700 in immigration fees, and and 3 grand in car bills (just the ones on the Subaru and BMW) all came at once.

It's so crazy how much better things are now though than they were in 2015 and 2016. In 2015, I made only 16 grand for the ear to losing my job in January 2015, then getting and losing another job from may to July 2015, only to finally get a good job in October of 2015. This is where most of my credit card bills came from for today--not having a job for most of the year while moving across country to be with my wife.

Then, in 2016, I was having to support my wife, who couldn't work for the first few months of living in the US and then worked part-time for only 4 months in 2016 until 2017. Having a $1,400 rent bill each month while paying off a massive car loan, 20 grand in credit card bills, school loans, and 3 grand to an immigration lawyer while only making $46,000 between me and my wife for the year was really tough in 2016.

In 2017, both of us were working full-time (made about 69 grand total between the both of us), and we were finally able to start breaking even and being slightly in the green each month, being able to make extra payments on debt each month.

Fast forward to this year, we're set to make about $92,000 this year between us, which is nothing crazy, but it's still well above the median household income. Our rent is down to $1,025 a month and car insurance is down to just over $100 a month (down from $275 for both cars). Our lawyer has long been paid off. After the Subaru is paid off, we'll only owe $20 grand in credit card debt with no car loan debt. Looks like we've paid off almost $20k in debt since 2016, and that's going to greatly be accelerated from now on. Life really is good.

A while back, I was deep in credit card debt. I want to say it was over $15,000...probably closer to $18. I had lost a job and was down to a single income between my ex and I. I had a buddy that was in a similar situation, and he got out of his. He told me to stop making payments to the CC company. He said that he did that, and eventually, the CC company settled for a lump sum payment that was a fraction of the total. I did that and eventually made a deal where I paid around 25% of the total to have it all wiped away. My score took a hit, and my credit limit was vastly reduced, but I had that burden off of me and could breathe again. I want to say this was in 2010-11 or so. My credit score now is great and has been for a few years.

I can't imagine how long of a process it would have been if I tried to pay it off conventionally or even one of those programs that supposedly helps you pay it off.

 

[The Process God]

A while back, I was deep in credit card debt. I want to say it was over $15,000...probably closer to $18. I had lost a job and was down to a single income between my ex and I. I had a buddy that was in a similar situation, and he got out of his. He told me to stop making payments to the CC company. He said that he did that, and eventually, the CC company settled for a lump sum payment that was a fraction of the total. I did that and eventually made a deal where I paid around 25% of the total to have it all wiped away. My score took a hit, and my credit limit was vastly reduced, but I had that burden off of me and could breathe again. I want to say this was in 2010-11 or so. My credit score now is great and has been for a few years.

I can't imagine how long of a process it would have been if I tried to pay it off conventionally or even one of those programs that supposedly helps you pay it off.

I'd be scared to do that. You didn't have to declare bankruptcy? I need my credit to be great in 1-3 years, not in five years. We're in a race against rising mortgage rates and house prices to buy a home, and I don't think that would be a good path for me and my wife. That's great and pretty crazy that worked for you.

I've been able to reduce my debt by about that amount in the past two years with much higher expenses on top of much less income than I have now. I think I will be lucky enough to not have to do that. I will probably have less than 10 grand owed by the end of the year on my credit cards and possibly even have all paid off by then. Once that happens, I'll just owe on student loans. Credit score should be around 740-770 at that point, which should afford me the best rates.

 

[Hurl Bruce]

I'd be scared to do that. You didn't have to declare bankruptcy? I need my credit to be great in 1-3 years, not in five years. We're in a race against rising mortgage rates and house prices to buy a home, and I don't think that would be a good path for me and my wife. That's great and pretty crazy that worked for you.

I've been able to reduce my debt by about that amount in the past two years with much higher expenses on top of much less income than I have now. I think I will be lucky enough to not have to do that. I will probably have less than 10 grand owed by the end of the year on my credit cards and possibly even have all paid off by then. Once that happens, I'll just owe on student loans. Credit score should be around 740-770 at that point, which should afford me the best rates.

No bankruptcy. I wouldn't have probably attempted it if I didn't know that it worked for someone I trusted. I don't know how long it would have taken to get out from under that otherwise. Wish I documented the recovery, so I could tell you how long it took for my score to recover.

 

[Pick6]

hello all. I've completely forgot about this thread! Is there a way to subscribe on this forum to see when there are new posts?

 

[FiveThous]

Has anyone here ever self published? I've been thinking of ways to make a few extra bucks each month.

 

[BMAN]

Do I want to reinvest for dividends and capital gains for my Roth? @Ob1 others in the know?

 

[The Process God]

Do I want to reinvest for dividends and capital gains for my Roth? @Ob1 others in the know?

Yes, you do. It compounds the interest. The only way I wouldn't do this is if you had debt with a higher interest rate than the likely interest you'd gain from reinvesting.

 

[Pick6]

Yes, you do. It compounds the interest. The only way I wouldn't do this is if you had debt with a higher interest rate than the likely interest you'd gain from reinvesting.

technically it helps compound the gains

I would not touch dividends/gains at all in ROTH regardless of you having higher debt to pay off. The only thing you can take out of ROTH with no affect is the principal. You would be penalized and I believe taxed for taking out gains prior to 59 1/2.

 

[The Process God]

Couldn't cover all of my expenses this month. But it was a tough month between owing 2k in taxes, $700 for my wife's 10-year green card renewal, and thousands in car repairs. Bills to totaled around 9k or so. Had to withdraw $1,350 in a cash advance. Since i maxed out the card that I withdrew $1,350 from and would have had to pay much higher fees to do a cash advance with my other cards available, I actually bought an expensive necklace from costco, then immediately returned it so that I could punt 1.3k an extra month down the road on my main credit card and pay off the whole bill so didn't have to start owing interest on that as well. Frowned upon, but whatever. This month's bills are about 3k less. I'll be able to pay them easily especially since I get 3 paychecks this month on top of a nice bonus.

I got my Subaru up for sale. This model goes for a premium in this area.

 

[FiveThous]

Anyone have expereince buying websites/apps? Any tips you'd recommend on where to start for someone whose done 5-10 minutes of research?

 

[The Process God]

Dude, lots of shit going down right now. Got into TWO accidents recently. The first one I know I'm not at fault, but the other guy's insurance is trying to say it's 50/50. I'm currently fighting that. The other accident, I'm definitely at-fault for, but the other guy is saying he's injured when I have him on video, saying he wasn't. I only have liability, so that sucks. The collision company is saying that it's $8.5k to fix my car, but that's BS because I looked it up, and the parts are all about 25-50% in cost compared to what they're quoting me. I think I can get it down to $4k. They offered to allow me to purchase them, which I might. We'll see what happens. Got about $10k more to pay off on credit cards before this incident, and I have until Feb 2019 before that debt starts gaining interest again.

 

[DJTJ]

Dude, lots of shit going down right now. Got into TWO accidents recently. The first one I know I'm not at fault, but the other guy's insurance is trying to say it's 50/50. I'm currently fighting that. The other accident, I'm definitely at-fault for, but the other guy is saying he's injured when I have him on video, saying he wasn't. I only have liability, so that sucks. The collision company is saying that it's $8.5k to fix my car, but that's BS because I looked it up, and the parts are all about 25-50% in cost compared to what they're quoting me. I think I can get it down to $4k. They offered to allow me to purchase them, which I might. We'll see what happens. Got about $10k more to pay off on credit cards before this incident, and I have until Feb 2019 before that debt starts gaining interest again.

The video means absolutely nothing. An injury can develop in the days after the accident, especially if it’s a soft tissue injury.

 

[Ob1]

Do I want to reinvest for dividends and capital gains for my Roth? @Ob1 others in the know?

What everyone has said so far is true, but I'd take it one step further. You don't have to DRIP (or reinvest) the dividends into what youre already holding inside your roth, but under almost no circumstance should you take the $$ out of the roth.

IE if you are holding 100% SP500 in your Roth and you get a dividend of X. You can have it automatically reinvested into the SP500 or you could do it yourself OR you could take the dividend and invest it in something else (inside of the the roth) like a Bond Fund, or an International Stock fund.

Point is, keep the dividends in the Roth. You're not going to pay taxes for not using DRIP within the account, but you also want to make sure the money stays in the tax free account.

The reason I say this is because IMO the biggest problem people have is that they dont look at the total picture of their investments. If you have 10k in a roth, 10k in a 401k and 5k in a taxable brokerage account, you actually have 25k invested, not just the 10 in the Roth.

If your goal is to have a 40-30-30 (US Stock, International Stock, Bond) split then you're doing yourself a disservice to only think about your Roth.

Rule of thumb, always keep your tax ineffcient investments in your tax free accounts (IE corporate bonds, high yield bonds, individual dividend stocks or stocks you plan on buying and selling often) and your more efficient holdings (cash or large cap funds that you are setting and forgetting) in taxable (unless you still have room in your non-taxable, then do that).


401k Match > Roth IRA > Non-match 401k = HSA > Taxable. NEVER FORGET THIS

 

[TopGun]

401k Match > Roth IRA > Non-match 401k = HSA > Taxable. NEVER FORGET THIS

I go 401k Match > HSA > Roth IRA = Non-match 401k > Taxable.