Personal Financial Question
I'm looking for some financial advice and I'm pretty confused on what to do. Hopefully I can get some guidance from you all. If this is not the right place for this discussion, please ignore it or tell me a better place to post it.
First, I messed up about 6 months ago when I didn't buy gold with my savings and now I'm watching it erratically fluctuate in a mutual fund.
Let's start here. I have about 5,000 in Credit Card debt that I'm trying to work my way out of. It really isn't easy right now on my salary. I'm even working a second job after school. I seem to be getting nowhere fast and the interest is growing. My question is, should I use my savings which used to be close to 10,000 to pay off my debt and then buy gold with the rest, or should I just pay off the monthly balance of my credit card bill. I really feel anxious and nervous being in any kind of debt right now. What should I do?
I've heard I should transfer over my debt to a 0% APR card and keep the money in the Mutual Fund or use it to buy gold. Does anyone know any credit cards that offer this? I've been looking but it seems like there aren't any without a catch.
I don't have much knowledge financially and would love to get some advice from knowledgeable people. Please only respond if you have sound advice. Or if you know an adviser I can contact please let me know.
In desperation. Thank You
Here you go
Gold can be looked at as many things, I don't really consider it an investment although it can be ... I personally consider it as long term savings and a hedge against inflation.
If that was my situation, I would take the 10,000 and divide it in half ... immediately pay off the 5,000 in debt to clear that up ... I hope your interest isn't through the roof.
Then I would take the remaining 5,000 of my savings and divide that in half, putting 2,500 into Gold/ Silver and the other 2,500 or 2,000 I would keep as liquid cash. If your new with metals, I would advise just stay with gold for now.
I prefer silver, but gold is much more rock solid for a newcomer. Don't expect to reach the moon with gold ... remember it is a hedge against inflation. It will protect your purchasing power over time.
Something to consider
If your interest rate is above the inflation rate, pay off the debt as fast as you can and don't worry about investing. If the interest rate is below the inflation rate, make the minimum monthly payments and let inflation eat away the debt. Use the money left over that you would have used to pay off the debt and keep it in safe investments that grow more than the inflation rate, if possible. Then, someday when the inflation rate goes below interest rates, pay off that debt in 1 payment. Otherwise you will actually lose more money paying off your debt right now.
Regarding the 0% card, I feel like those cards are really just buying you a little time and can really screw you over if you can't make your minimum payments when the interest rate goes up after the introductory period.
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"We will never give up. We will never give in." - Dr. Ron Paul
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"We will never give up. We will never give in." - Dr. Ron Paul
Pay off the debt or...
...if your reports are clean and you have a high enough fico, apply for a 0% APR card. There are some good balance transfer deals out there, though most are limited to 9-15 months. At any rate, don't carry cc debt if you can help it. And should you balance transfer, try not to transfer more than 35% or so as this will lower your fico for a few months. Well, your fico is going to be lowered anyway for a few months because of the new credit, but proper utilization is important for long term credit health.
Whatever you do, don't cancel a card that has no annual fee. The more you learn about credit limits (credit is not debt) and utilization, the more you will know how to use it to your best advantage with higher fico scores and the best terms on mortgages, auto loans and credit cards.
Believe me, there are a lot of "experts" out there who have no idea how to effectively manage credit or how to achieve the higher fico scores necessary to always get the best terms when you DO need credit.
what do you need all this credit for?
other than a mortgage or possibly a car payment (which i would not recommend), who needs it? anyone who has listened to dave ramsey can tell you that a solid job and two years paying rent and bills on time with a 20% down payment will get you a house. people get waaaay to wrapped up in their credit score. remember, credit is what got this country into this mess in the first place. if everyone lived within their means, we probably wouldn't be where we are now.
Actually. it's the misuse and ignorance of debt...
that caused a lot of the problems. Credit is not debt. I personally have around $180k of available unsecured credit I can tap. I have zero debt, except for a mortgage, since I pay in full on my credit cards.
Dave Ramsey is not someone who's advice I personally would follow. Paying rent on time has no positive effect on your credit score as rent payments are not reported to the 3 major bureaus (there may be an exception or two, but it is rare). However, if you miss payments and go to collections, that will be reported. Same applies to gas, utilities, water, etc. payments.
You can live within your means and still have a strong fico. If you don't have the fortitude and discipline to have and use credit wisely, then don't get it. Many who got sub-prime or interest only mortgages would didn't understand credit / debt well would fit into this category.
But I believe in personal freedom and personal responsibility.And that applies to credit matters as well.
So you're saying to pay off
So you're saying to pay off the debt, but keep the card? Don't get rid of the credit card because it hurts your credit score. correct?
Yes.
As long as there are no annual fees, just let it age and use it every 3 months or so and pay in full.
This is just
my two cents, GET THE HELL OUT OF DEBT! Just wait till that debt starts compounding. Seriously, it will be a joyful day when you pay it off. Some advice my mom told me years ago. Neither a borrower nor a lender be. If I didn't have the money I didn't buy it. My dear husband is the same way. We sleep well at night except for thoughts of fema camps. Good Luck on whatever you decide. Peace
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Pay off your debt
Use some of your savings to pay off your debt. Here is the reason. You are paying more in interest payments to the credit card companies than you are earning on your savings. Once you have your debt paid off, cancel the credit cards. A good rule about borrowing money is not to do it unless the money you borrow is going to increase your capital after the amount borrowed is paid off.
It is up to you, but I would take at least 10% of what is left of your savings and put it in physical precious metals, divided between gold and silver. Don't put all of your money in precious metals, you may need some cash at a later date. If we face the collapse of the dollar, your precious metals will preserve your purchasing power; if we don't face currency collapse, then your fiat dollars will be useful for purchasing goods at a later date (savings).
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"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."
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more info
How old are you? Do you have any kids or anyone dependent on your income? Is the 5K your only debt? How much is in your 401 and are you fully vested? If you are not fully vested, you might as well leave it alone.
I am a believer that debt is never good, especially credit card debt. You shouldn't really be investing for retirement with outstanding debt.
I'm 27 single and the debt
I'm 27 single and the debt is around 5,500. I also have some student loans around 15,000, but those should be forgiven at the end of this year. I have car payments too, about half paid off. 8,000 left.
I'm a teacher and I've been working for 5 years... I have just what's been going into my pension that which is automatically taken out... probably near 8,000.
Other than that I have not contributed to Teacher's Retirement System, which I guess I need to be doing. Not very educated in this field. I have the paper work to fill out, but I know it will be taken out of my paycheck, which at this point I feel I need every penny.
get rid of the car payments
sell the cars and if you have no other savings, take out a small personal loan to buy a much cheaper vehicles. you have two car payments and you are single? whats up with that? like the rest of the posts say, first and foremost get out of debt. playing russian roullette with debt and investing is a sure way to get in trouble. get rid of all the debt you can, live within your means. i do not know what the ramifications of a pension plan early withdrawl would be. is that a vested type of investment, as in, is all the money yours? my 401K is not all mine until 8 years. that is, the employer match is not all mine until 8 years are up.
that being said,
if this is just a "for fun" or extra retirement device, i would personally cash it out. about six weeks ago, i cashed out a rollover ira from a former employer 401K. it was only 14K and i used it to get rid of my 20% portion of my 15yr mortgage and a small home equity loan. i saved 1K in cash on hand, used 3K to buy gold and silver. saved 30% for taxes. i feel so much better after doing this.
Thank you all for
Thank you all for responding...
On retirement:
I really don't know... I need to look into it more. I don't think I can touch it until I'm retired. I'll have to check though. I'll look into cashing it out. I only have one car payment. Sorry, typo.
So should I pay off this credit card with my savings or not? I might rollover this debt into a 0% card and then pay off the car. After those payments are gone, then I can chip away at this CC debt in the 12-15 months on a 0% card. good or bad idea?
the mutual fund
you speak of in the original post - i suppose this is extra, not your teachers retirement account? if so, i would personally cash it out (you will have an early withdrawl penalty, probably 10% plus you are liable for the income tax on it at the end of the yr). i would absolutely pay off the card, get rid of it. sell the car, buy a cheap car. pay cash from here on out. all the guys talking about interest vs. investment returns, let them do it. if you play with snakes, you will get bit. IMO, regaardless of returns on the money, it is an incredible weight off your shoulders to not have debt hanging over your head. your best wealth creating tool you have is your income. get out of debt, keep working, save cash (and some PM too).
I agree. Yes, the mutual
I agree. Yes, the mutual fund is not tied to my teacher's retirement account. So I will cash that out and pay off the Credit Card. How about the car? Why don't you think I should continue driving the one I have now... It's tight, but I think I can afford the payments for now, and I'm not sure I can sell it for more than what I owe on it at this point.
What do you think?
THank you
you can't sell it for what you owe
the problem with cars overall is they go down in value. people shouldn't have so much wealth tied into their vehicles as they lose value. if you can swing the payment and like the car, then you could keep it i guess. if you can cash this out, pay off the card, and also pay off the car, i would go for it. i would not have cash or big investments sitting around while i am making a car payment. student loans suck, i know. i just paid mine down this year, my wife has two years of graduate school to pay for yet. to be debt free (i am not there yet, i paid a lot of "stupid tax" as dave ramsey says when i was younger) is to be free. keep and emergency fund on hand in cash, 1K. this relieves the stress of the ppaycheck to paycheck mentality. get out of debt and you will be ok pretty much no matter what. don't worry about the future money you might miss out on by pulling the investment.
The reason I was holding on
The reason I was holding on to $ is to have as a backup and in case I needed a lump sum to put put down on a purchase such as a house, but I guess the debt cancels that out huh? So i'll heed your advice and get out of this debt, then start saving from scratch.
Thanks all.
First pay off your debt
Worry about steps 2 and 3 later.
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