Opinions Wanted: Credit Card Debt

[Hawkeye]

I respect the opinions of people here, so I thougth I would ask a question to see what you think. I have a little credit card debt (racked up during what I like to call my "idiot years"). It's not a bunch of money, but enough that I can't pay it off immediately. One card has a 0% rate for the next 13 or 14 months and the other is at 2.99% locked in (unless I don't make a payment or something stupid). I make the payments easily every month, and pay more than the minimum. My "extra" money goes to buying a little silver, gold, etc. Everywhere I turn, I hear "pay off credit cards. pay off credit cards. Eat rice and beans until you have them paid off..." While I do find them mildly annoying, with interest rates that low, I'm just not inspired to really put the hammer on them. I don't use them anymore, so I am paying them off, just more slowly. My question is this: in my situation, would you pursue my current course (pay the minimums and a little extra, use excess money elsewhere) or bury them as quickly as possible? Thanks.

[henrysmedford]

I would pay off the cards. I bought junk silver when silver was at $18. If you look at the chart it dropped right after that. You never know last summer almost $50 but that payment we be there until it gone.

[68Camaro]

NORMALLY, I would tell people to pay off debt, but there is a point where these decisions depend on too many intangibles to give a certain decision, without a LOT of questions. I'll ask a few, see if that gets us anywhere.

How many months, at your current rate of payment, would it take to pay them BOTH off? If you stopped buying PMs and dedicated yourself to paying these off, how much more quickly could you do that?

What is the balance ratio between the two cards, the zero interest for 13 months and the 2.99 forever? 50/50, 10/90? etc.

How secure do you FEEL (this isn't a certainty, but you know whether or not you feel like you have a target on your back) in your job/income?

[barrytrot]

Eliminating risk is one of the biggest keys to becoming *wealthy*.

Your rates are low now, which is great. Of course, my guess is that if you read the 3 page small-type agreement it will indicate that they might just raise them at any time.

Additionally, they might have some sort of "call the debt" ability in the future. (Callling the debt is where the company that you owe money to demands payment in full within 30 days or "something".)

Those are probably remote possibilities, but possibilities none-the-less. My recommendation is to eliminate the "super downside" and paying off the credit cards does that.

[NHsorter]

Foremost, without more details like what 68 asked, it is tough to make a call. Too many variables.

Gotta have a plan for when those rates expire! You can't count on being able to get those rates again. I don't carry any credit card debt, but there are instances that I will carry a debt to my advantage. I got a 0% loan on my truck purchase. Never made an effort to pay that one off early. Free money. Same with some furniture we bought. It kinda burned me to make payments on a couch and stuff each month, but I just had to remind myself that it is free money. With that 0% debt I free up more money to make (or lose ) more money with. So far I have been pretty lucky

I had a college professor that encouraged students to take out all of the student loans that they could and to put it into the stock market! That was a little too crazy for me. You can't get out of re-paying those. And it was 1998, so that probably would not have ended up too well! But he did have a point. If you can borrow money for cheap and make it earn more for you, you will come out ahead. Gotta be sure to measure the risk on everything though and have a worst case scenario back up plan.

[AGCoinHunter]

No doubt, pay them off as soon as you can. Personally I dont care if they are 0% APR for the next 10 years. Something unforseen could happen and you never get around to paying them, then you are back in the hole. Throw everything at getting rid of the debt, then throw everything at an emergency fund that will give you living expenses for 4-6 months, then you can starting stacking. Again, this is my 2 cents.

[Hawkeye]

NORMALLY, I would tell people to pay off debt, but there is a point where these decisions depend on too many intangibles to give a certain decision, without a LOT of questions. I'll ask a few, see if that gets us anywhere.

How many months, at your current rate of payment, would it take to pay them BOTH off? If you stopped buying PMs and dedicated yourself to paying these off, how much more quickly could you do that?

What is the balance ratio between the two cards, the zero interest for 13 months and the 2.99 forever? 50/50, 10/90? etc.

How secure do you FEEL (this isn't a certainty, but you know whether or not you feel like you have a target on your back) in your job/income?

Thanks for the opinions - great information. Here are some answers:

Current level: I will pay off the 0% around the time the 0% offer expires (next spring), the other will take about 3 years. If I locked down all other spending, I could probably have them both done by around November.

Balance ratio: 0%: about 30%, 2.99%: 70%

I feel very secure in my income - or, as secure as anyone can feel in this economy. I have 2 jobs, one of which I'm the boss (and I don't plan on firing myself). Second job is some extra money on the weekend and it's enjoyable.

On another note, if my rates were to go up dramatically or the debts were to be called in, I could pay them off. I would take some hits and penalties, but it could be done.

I do like the idea of paying them off just because I'm tired of dealing with them, but I also like the "free/almost free money".

[barrytrot]

Remember - You can make more money.

You can NOT make more time.

Paying a bill every month is a few seconds of time you could be "spending" on something else. And probably more than a few seconds.

[Hawkeye]

If I'm going to start burying this debt, you guys are going to have to stop offering to sell me small amounts of silver at reasonable prices.

[68Camaro]

This isn't advice, but it's a suggestion, and/or a process/path that can be modified at will.

To be honest, given what you've noted above, I can't tell you to pay it all off now, under those conditions, without being a hypocrite. I am currently carrying a car loan at 4.5%, which I could pay off, but I actively chose to keep the cash (not to mention PMs) in reserve, and continue to make the payments while I am bringing in a regular salary. There is obviously a limit to this type of behavior, and I'm at that limit for myself, as I won't add further to that debt no matter the type. This may seem insane but the interest I am paying is relatively small (so small that while I've been offered sub-4% rates, the fees and pain of doing a roll-over haven't been worthwhile), and I can always go pay it off at my discretion at any time. When some other events currently underway (taxes, a major home addition) stabilize circa summer I will re-evaluate, which I do on a regular basis.

Personally, under those conditions, I would be doing something very similar to what you are doing. Actually, I am sort of living that. Continue with a slightly accelerated payment plan, ensure that the 0% loan is paid off before the period ends in a year, don't add to any other debt, and continue to pay down the 2.99% loan. You have to go with your gut sometimes, and I personally feel that the odds of seeing silver lower than $30/oz again are rather low. There might be another mini-crash - a moment in time - where there is another one-time buying opportunity. But I think there is a greater likelihood that silver is as cheap now as it will ever be again. And that is partly while I continued my gold and silver buying at a reasonable pace the last three months, rather than paying off that car loan, which I easily could have done with what I've spent on PMs the past 4 months. I'm now about as near all-in as I can be, apart from dibs and drabs that may cause me to buy an ounce here or a roll there.

[scrapper2010]

I would also add that you could do a no fee 0% APR balance transfer on the 2.99% debt. If not the whole balance, then at least an amount that you could pay off before the 0% APR period expires. Here's a link to a site that lists the current ones available. http://www.mymoneyblog.com/best-pre-scr ... fer-offers

[Delawhere Jack]

Inflation is running well above 2.99%, so I would be in no hurry to pay of either card. I suggest everyone make it a point to check the due date on CC statements every month. About 7 years ago Citi changed to due date on my card from the 28th to the 24th of the month. And they also reduced the font size that the due date was printed in. I mail out payment not noticing the new date, and next month find that they've slapped a $30 late fee on me. I promptly closed out the card.

[BamaJoe]

Alot of folks consider me insane, but I would advise you to pay them off, along with any other debt.

Debt is slavery, plain and simple. To put yourself into debt or to go into debt is putting yourself into slavery (along with your family if you have one).

I've always been mystified at those who would preach portions of the Bible, yet ignore the most basic things like "The debtor is a slave to the Creditor" or "Owe no Man". Just look in a church parking lot on a Sunday and you will find it full of autos that the members have sold themselves and their familes into slavery in order to satsify their pride. This includes churches themselves who think nothing of going into massive debt for a building.

Beside, you will be amazed at both how fast you can build wealth when what you earn is yours to keep and how well you sleep when everything is paid for.

[barrytrot]

There is a LOT of debate (Biblical) on whether "debt" = "owing a single dime" or "debt" = "undue interest" or "debt" = "cannot pay" or somewhere in between. BamaJoe makes decent points and I would agree that "debt" is bad, but I don't believe that "debt" = "owing a single dime" and neither does my Pastor actually as he has preached about it a few times differentiating between "undue interest" and things such as a "mortgage".

I will agree with BamaJoe on this point though: If you are able to pay off debt you are better off. Playing games making some tiny percentage PER YEAR on your money by investing it elsewhere (WITH RISK, mind you!) is never going to make you wealthy.

That said: if you have some sort of real estate investment strategy that relies on debt then go for it. Those can work if done properly but buying a few extra ounces of silver is going to mean zilch to your wealth pursuit!

Isn't that the goal in this situation? To become wealthy? Making a few dollars even thousands of dollars does very little toward that direction, but changing your life to focus on wealth does a TON!

[68Camaro]

As a side commentary - I personally have no burning desire to become "wealthy". If God was to ordain that it would be for a purpose and not for my pleasure. People that become wealthy without a larger purpose tend to either lose it all fast, or kill themselves. I don't put my faith in money. I primarily wish to preserve assets through conversion of FRN debt paper to PM, which is a responsible thing to do. If I happen to catch a rising tide, so much the better. But to be wealthy adds to responsibilty - it's a burden more than a blessing. I won't shirk it, but I don't seek it.

As to "debt" - absolutely, there are different types of debt. Some is debt in name only, and there is no slavery in that. Debt is a tool, and you can use it productively (as with the master who gave his servants the various talents, expecting return - payment on debt) or you can use it destructively. God counsels against destructive debt, not against constructive debt. If you can't tell the difference, by all means, the wisest path is to avoid all debt.

[barrytrot]

As a side commentary - I personally have no burning desire to become "wealthy". If God was to ordain that it would be for a purpose and not for my pleasure. People that become wealthy without a larger purpose tend to either lose it all fast, or kill themselves. I don't put my faith in money. I primarily wish to preserve assets through conversion of FRN debt paper to PM, which is a responsible thing to do. If I happen to catch a rising tide, so much the better. But to be wealthy adds to responsibilty - it's a burden more than a blessing. I won't shirk it, but I don't seek it.

Then why don't you find a purpose bigger than your current purpose? (I edited my original post as I see that you prefaced your statement by "those that don't have a larger purpose" which makes a lot more sense.)

Interesting that you assume the wealthy "put their faith in money". That's not always the case and probably even with non-faith-based-people not even the norm. You can't become wealthy for a lifetime if you believe the money has some sort of "power". You or your team or your concept or your creator or something is where you need to put your faith in order to become truly wealthy and not also kill yourself.

There are many wealthy people that are nice people and quite generous. And by generous I don't mean giving $10,000 when you make $1,000,000, I mean giving more than the vast majority do percentage-wise even. And, that type of giving can change MANY lives.

[68Camaro]

All good thoughts Barry. I'm not sure we're fully on the same page, but here is more of where I am coming from. This goes off-topic even further, so my apologies to the OP.

I believe we should find the purposes God has for us. He doesn't want/need all of us to be billionaires. God has given me a lot of resources. I am blessed by that. I don't need more. If he chooses to give me more it will be for his purposes, not mine. God doesn't want us to seek wealth for its sake. God wants us to seek him and doing his will, using our God-given skills and talents to our best. Sometimes that results in wealth, which if He so grants us is meant for His purposes not ours. Don't presume then that seeking even more wealth is an even better thing - if it's not something God wants then it is for our own purposes rather than His. That applies to any endeavor. Just because God wants one person to do X, doesn't meant that he wants all of us to do X, or that trying for 2X is somehow "better".

Of course attainment of wealth is possible outside of a relationship with God. Happens all the time. That's primarily what I was referring to.

Re-read what I wrote again - I didn't say that the wealthy put their faith in money. I just said that I don't. However, there is a well-known, well-documented tendency for the wealthy to put their faith in their money - to gauge their happiness by their power or bank account balance. That doesn't mean that all financially wealthy people do so, just that there is a strong bias toward that. Of course there are many financially blessed people who are well grounded, who know their true place, who are extremely generous, who put their faith in God.

Financial Wealth is actually relative, rather than an absolute. Even though I can't buy a 10,000 sq ft villa on every continent, or a 200 foot yacht, in financial terms I am already more wealthy than 99.999% of the world's population. Reminded by that, I am thankful for the significant blessings that I've been given.

True Wealth is also attitude rather than bank account. I feel wealthy. I would like everyone to feel wealthy, regardless of their circumstances. It is a special type of peace. Paul was able to reach that place and talks in his letter to the Philippians that is all about a relationship with the Supreme Being of the universe, attainable by anyone - a choice - made possible by the self-sacrifice of Jesus.

[barrytrot]

Well said, thanks 68Camaro.

[reddirtcoins]

credit card = evil... IMHO... Don't own one, don't want one. Pay them off, cut them up.

[Delawhere Jack]

Alot of folks consider me insane, but I would advise you to pay them off, along with any other debt.

Debt is slavery, plain and simple. To put yourself into debt or to go into debt is putting yourself into slavery (along with your family if you have one).

I've always been mystified at those who would preach portions of the Bible, yet ignore the most basic things like "The debtor is a slave to the Creditor" or "Owe no Man". Just look in a church parking lot on a Sunday and you will find it full of autos that the members have sold themselves and their familes into slavery in order to satsify their pride. This includes churches themselves who think nothing of going into massive debt for a building.

Beside, you will be amazed at both how fast you can build wealth when what you earn is yours to keep and how well you sleep when everything is paid for.

Take out your wallet. Take the currency into your right hand. Those are not dollars, those are debt coupons. DEBT WILL FIND YOU!

I agree with you about the Biblical teachings, (and wish more preachers would bring them up once in a while). But if you're already in debt, my theory is stop adding more, and get out of it in the smartest way you can. There's no point in surrendering more of the value of your toil by paying off a low interest debt with wildly depreciating "money".

[Rosco]

I managed to make some small buys when Silver was about $30.00 Now $33.60 so we need to look at Opportunity Costs because that shows the Dollar lost 10% purchasing power.
I missed some opportunities when I could have but Did Not

As has been stated no single best Answer.

[barrytrot]

I managed to make some small buys when Silver was about $30.00 Now $33.60 so we need to look at Opportunity Costs because that shows the Dollar lost 10% purchasing power.
I missed some opportunities when I could have but Did Not

As has been stated no single best Answer.

Or you could have bought when silver was 49+. That means the dollar has a LOT more purchasing power.

The price of silver fluctuates like the waves. Although I agree that $30 or less is sort of a no-brainer. Or at least has been thus far.

[inflationhawk]

There's no such thing as 'extra' money if there is credit card debt. Don't mean to preach as everyone has there own situation for having debt. Once you pay it off, it will feel like a huge burden lifted off your shoulders.

[Engineer]

There's no such thing as 'extra' money if there is credit card debt. Don't mean to preach as everyone has there own situation for having debt. Once you pay it off, it will feel like a huge burden lifted off your shoulders.

+1

Awareness of being in constant debt adds a lot of stress to your life even though it doesn't seem like much at the time. It isn't until the weight is gone that you realize just how heavy it was.

[Hawkeye]

To be honest, it felt like a huge burden was lifted when I forced myself to grow up, stop using the dumb things and formulate a plan for paying them off. That was couple years ago, and I'm well on my way. It will be great to not have to mess with them any more. Thanks for all the advice.