some help with credit cards and debt (IRA, expenses, borrow) - Economics - City-Data Forum

SamNC · 05-08-2009, 05:27 PM

I have some debt I would like to get rid of or mitigate; under $4,000. 0% interest.

I have no real cash on hand to get rid of it, but I contribute $700/mo to my 401k. Should I cut back on the 401k to get rid of this debt?

I also have a HELOC of about $3000 (due to divorce costs). It is about 3% interest. Do you think it is OK just to keep this floating around, or should I try to get rid of this debt?

I make 70K-yr, and am 30 y/o. I have about 25K of equity in house (not tapped, nor do I want to)

any suggestions on how to get rid of this debt, or should I not worry about it ?

Woof Woof Woof! · 05-08-2009, 05:31 PM

If it is zero percent, you should continue to make minimum payments while building your savings.

texdav · 05-08-2009, 07:28 PM

make the payments at 0% interest.

user_id · 05-09-2009, 03:47 PM

If you have no emergency fund then building one is more important than your retirement contributions. The reasons why you have the debt are likely related to you not having such a fund.

In terms of the debt, so long as its at 0% its obviously not a big deal. But that is likely a promo rate, what will it increase to? If its high you may be better off paying it off instead of contributing to your retirement account.

bls5555 · 05-09-2009, 09:16 PM

Quote:

Originally Posted by SamNC

I have some debt I would like to get rid of or mitigate; under $4,000. 0% interest.

I have no real cash on hand to get rid of it, but I contribute $700/mo to my 401k. Should I cut back on the 401k to get rid of this debt?

I also have a HELOC of about $3000 (due to divorce costs). It is about 3% interest. Do you think it is OK just to keep this floating around, or should I try to get rid of this debt?

I make 70K-yr, and am 30 y/o. I have about 25K of equity in house (not tapped, nor do I want to)

any suggestions on how to get rid of this debt, or should I not worry about it ?

If you make 70,000 per year and have a 4,000 debt, then please get rid of it as soon as possible. Obviously the 0% doesn't last forever. You didn't say what it jumps to. You also didn't say the rest of your expenses. If you are living reasonably and all you have is $7,000 worth of debt, then there is no reason it isn't gone already.

What are you spending your money on if you are not wanting to get rid of this tiny debt?

As for your idea suggestion about getting rid of your debt. Quit spending it on s--t and just pay the 7,000 off. It doesn't sound like you are overspent on bills or anything so get rid of it in the next 6 months.

debtmonger · 05-10-2009, 11:06 AM

It's debt, the percent rate on the debt is not an issue with me. I would work to get rid of all of it. But, Building up an emergency fund is more important at this time. I would build up an emergency fund immediately and stop temporarily putting money in your 401K until that is completed. I would get at least 6 months of expenses saved ASAP. It won't take long with your income. The emergency fund should be in a money market or savings account, not stocks or bonds. When an emergency come up, then you won't have to borrow, you will have the reserves to cover it. Once, the emergency fund is in place, I would put money back into the 401k up to the company match and then take out a Roth IRA up to a total of 15% of your income. You could start at this time to put some of your additional money in mutual funds for growth and an additional pad to your emergency fund. You have a long time before retirement, you have a good income, just make sure you keep any eye on your spending.