Would you do it?

iVillage Member
Registered: 03-27-2003
Would you do it?
8
Wed, 06-15-2005 - 4:25pm

In the spirit of several recent posts, I'm posting with my own dilemma to which I know the answer is that only I can decide, but I'm interested in feedback anyway.

Here's the situation. I owe $3533 on a cc that is at 0% and that I simply surf to another card each time the limit runs out on the 0%. I owe another $1765 on a credit line at 10% or so. Then the bulk of my debt is owed to my dad at 7.5% and then another $5,000 is owed half to my dad and half to my dh's parents at no interest.

Right now, I am paying the largest payment to my dad, but I really want to see that credit line at nearly 10% and $100 a month go away. I have over $2000 in my auto repair account. I know I need about $750 of that for upcoming repairs, and would like to keep another $250 just in case, but I could spare $1000 for debt payment.

By raiding our Christmas, medical, dental, birthdays, carpet cleaning, and part of the money for our trip to California (which is paid for--raiding it would leave $200 for spending money, probably more than enough considering that we'll be staying and eating with family), I could completely wipe out the credit line, and begin sending that $100 a month to my parents.

It would feel SOOOO good to do that. And the Christmas and birthdays could be funded out of bonuses we expect dh to get. Medical and dental, we'd just have to keep our fingers crossed on. And the carpet cleaning could wait. We would still have over $1000 in our contingency fund for major emergencies.

I would feel pretty vulnerable not having these additional cushions, but I would *love* to wipe out that credit line.

Would you do it? Should I?

Thanks!

Heather

iVillage Member
Registered: 11-13-2004
Wed, 06-15-2005 - 4:37pm
I agree to pay off the card as long as you are disciplined and know that you would not rack the card back up again or you will be in the same boat and be $1000 "poorer". You are hopefully more disciplined than I am though, because I have used savings to pay off my credit cards in the past and then have racked them right back up. I would bite the bullet and pay the card off and then probably cut it up so you cannot use it again, but keep the credit line open so that it won't hurt your fico score. Sounds like that would be great progress for you!! Good luck and congrats on being closer to debt free!!
Avatar for mymartes
iVillage Member
Registered: 03-26-2003
Wed, 06-15-2005 - 5:57pm

Heather,
If I were you, I would pay off the credit line at 10%.

You have been doing so great with paying down debt, and saving. I'm sure it won't be a problem for you to pay back the saving account.

Let us know what you've decided to do.

MYM

iVillage Member
Registered: 03-27-2003
Wed, 06-15-2005 - 6:59pm

Thanks for the feedback and advice! We've been paying on our debt for about three years now, and during that time have not gone further into debt on any occasion, so I'm not too worried about being disciplined. Mostly, I was just worried that I might not be seeing something important about those various cushions that I have to raid to get the debt paid off.

Anyway, thank you for the encouragement. I sent the same question to my dh at work, and he suprised me with an unequivocal, "No discussion needed, let's DO IT." So I've started making the transfers and will make the payment tomorrow--woopee!!

Thanks.

Heather

iVillage Member
Registered: 03-27-2003
Wed, 06-15-2005 - 7:03pm

Thanks, MYM! It's great to have the encouragement. I sent an email to my dh asking his thoughts on the matter, and he surprised me with an unequivocal, "No discussion needed, let's DO IT." Threw me for a loop! LOL

So I've already started the transfer process from the various accounts, and I'll make the payment tomorrow. Wow, it will feel good to have that one paid!

I opened the credit line seven years ago when we moved to Charlotte. We used it to pay the difference in what we received for our house in Iowa and what we still owed on it.

Despite the fact that for three years we were a two-income, no-children family, we managed to not get that darn thing paid down. And then, when we went to a one-income, with-children family, we maxed it out, got a credit limit increase, and maxed that out too. Sheesh.

And now, tomorrow, I am paying it ALL THE WAY OFF. For the first time in SEVEN YEARS. Wow.

:) :) :) :) :) :) :) :) :) :) :)

:)

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Wed, 06-15-2005 - 7:29pm
Heather - I absolutely would do it.

All my best,
Danni

iVillage Member
Registered: 03-27-2003
Wed, 06-15-2005 - 7:40pm

Thanks, Danni. I thought about splitting the savings, too. However, all these funds are built regularly out of our budget, so they'll be gradually rebuilt over time anyway. And part of the great thing about paying this off is that it takes an entire, incredible NINE MONTHS off our total debt repayment plan, because of the snowball effect of that $100 a month going to the next target debt.

Besides, we still have the $1000 contingency fund, plus a number of other cushions (including a buffer amount in our checking account, the auto repair savings in our savings account, and miscellaneous other things should we need them--oh, yeah, and then there are several thousand dollars in my business account, but of course I won't touch that unless it gets really ugly around here LOL), so it's not like we'll be high and dry if anything bad happens suddenly.

And, if I feel slightly less comfortable, I'll be more motivated to be frugal. I've gotten rather lax with the budget lately, going out to dinners we didn't really have the money for (and raiding various funds for it), and so on. So this will give me the motivation to quit doing that while I rebuild.

Thanks for the feedback. It feels good to know others think I'm doing the right thing.

Heather

iVillage Member
Registered: 03-27-2003
Wed, 06-15-2005 - 7:45pm

I should add that this puts our total debt under $18k. Down from a high of almost $33k three years ago.

:)

iVillage Member
Registered: 12-07-2003
Wed, 06-15-2005 - 8:54pm
I'm always bigger into paying off the debt with the higher interest.