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(02-03-2018 05:10 PM)LionHound Wrote:  

I don't have any inheritance coming but I do have a couple maxed out credit cards that I am in the position to either pay off or pay down significantly.

Got 1000 dollars to spend on paying down my credit cards.

first card has a 1000 limit, its maxed out and charges interest.
second card has a 1.5k limit also maxed out and charges interest.

I could pay off card #1 right now or split it up and half the balance on #1 and lower the balance on #2 by a third.


Any advice from the RVF gurus would be appreciated

There is no advantage to carrying a balance on a credit card, unless the money you're saving is accruing more than the 19.5-24% interests the card is charging and if you have an investment like that, we'd all like to hear it.

I have travel reward cards. Use them for EVERYTHING, but I don't carry a balance. I still get the rewards, I just pay none of the interest.

There is "good' debt and there is "bad" debt. Sounds like you're balls deep in "bad" debt, which probably means you don't have any "good" debt, i.e. a home loan in which the interest is tax deductible and usually at a very, very low interest rate (4%). That 4% interest deduction could save you more on your taxes, assuming you pay taxes.

My advice, pay off the one card that you have right now and never carry a balance on it again, then start chipping away at the other, then do the same.

Conversely, I have enough to pay off my home. It doesn't make financial sense to do so. The interest is 3.85% on the loan and I am making twice that in my other investments. Makes no sense to rob those investments to pay off the home loan at such a ridiculously low rate. It's like the leant me money for (almost) free (3.85%). If you are ever offered an interest free loan--take it (assuming you can afford it). T-mobile does this with their products. You can't buy a new iPhone from them if you have an existing account. But, they will sell you one on an interest-free loan, so you renew your service contract. Makes no sense to take out $800 to buy the phone, even though I have it, if they're going to give me the money for free, right?

That's just the simple gist of it. It gets way more complicated the more money and credit you have. Imagine when that credit card you have has a $57,000 limit on it. If you max that out, your monthly interest payment is friggin' substantial. You don't want to live your life that way.