Monday, January 2, 2012

Not now...but maybe in a few months??

One of the biggest hurdles we had with our credit cards has been the interest rates.  At one point, we were paying 19.24% on a large balance card!!  We did a Lending Club loan and a few other things, and worked around it.

As it stands right now the interest rates are:

  • CC2 - 11.99%
  • CC3 - 14.24% (but the current balance was a balance transfer offer of 1.99% through January '13)
  • CC4 - 9.24% (but over half of the current balance is at 5.99% from a balance transfer offer)
  • Lending Club - 7.88%

I would really like to get as much of this revolving credit down to as low of an interest rate as possible.  The place that has the lowest rate....our retirement account.  Once the current loan is paid off, we can dip into it again in 60 days.  The rate?  1.75%.  Of course any money we would withdraw would not be earning interest for our retirement.  We would have to be sure that the overall benefit would be worth it.

The reason we are considering this is that G-man isn't even eligible to retire for 19 more years.  Once the debt is paid off completely, we plan on aggressively saving for retirement.  And if we can get the debt paid off within 4 more years, that would still give us 15 years to really save and invest.

I have kicked around a few thoughts.

  • We can take out $6500 for a 24 month term and pay off Lending Club.  If we increase the minimum payment so that it is paid off at the same time Lending Club would have been paid is a net savings of roughly $40 a month for 17 months, or a total savings of $680.  That $40 savings would go towards another CC.
  • We can take $10,000 out over 3 years, which would be $130 a paycheck, and pretty much wipe out CC2 for the same amount we are paying per month now.  

Another idea we had was another Lending Club loan.  More interest, but doesn't effect our retirement.

We aren't going to do anything would be April the earliest that we would do ANYTHING.  We have to wait for 2012 to settle....wait for the current retirement loan to be paid off for at least 60 nothing anytime soon.  I just really want to find the right avenue to make progress!!

We do well with the "set it and forget it" stuff.  We set up payment plans, and just let them do their thing.  Lending Club has been fabulous for that.  We got the loan....we put money aside each paycheck...and once a month they debit our account.  Once the January payment posts, we will be almost half way paid off!

G-man's car was the same way.  We had money direct deposited into the account, and it was debited once a month.

I am trying to do the same thing with the rest of our debt.  Just trying to get it to the lowest interest rate possible!   Any thoughts????  Right now we have $1105 in the budget that is designated for CC payments (minimums + $150 extra).  This is JUST for the CC and current Lending Club loan.  Not the car, student loans, or medical.


  1. I honestly have no idea about interest rates, shuffling around debts, etc.. But I'm sure others will have great advice! I'm sure you've probably done this, but calling & asking for lower rates works sometimes... It's hard to make a dent in your debt when the stupid interest rates are so high! :/ Good luck!

  2. Oh yes, we have called about the rates. Many times. They won't budge. We have asked for the manager, and that has backfired (I actually got my credit line CUT).

  3. Looks like you are moving in a forward direction but see that it's a long road. If you haven't I suggest you read Jacob Fiskers book Early Retirement Extreme and my free on-line book that has worksheets. Both might give you more ideas to tackle this. Getting your credit line cut is not necessarily a bad thing.

  4. If you aren't doing anything right now, I would just wait to make up your mind, you may end up with a 0% offer hitting your cards to transfer ~ that would be the most ideal ;)

    I am with you on the set it up & forget it - that is how our savings for homeowners/property taxes is set up - we need $70 per week to pay homeowners & property taxes, but we have $100 per week come out before we even see it... that works best for us! forced savings!!!

  5. @Carol - thank you

    @JP - The cards that offer the 0% don't have much room on them for transfer. We could transfer to CC1 for a short time (they offer 0% for 6 months), but then the rate is 15.99%. Once you factor in the 4% isn't worth it.

  6. Mysti these are large balances with high rates. How much can you borrow from the retirement? How much more quickly can you pay it back? Those three cards are about $30,000.00 can you get that much at 1.75% and will you tear up the cards and try to pay that off in say 5 years? I would do that, but you have to be so careful not to rack up the debt again. We never had a retirement to draw from. But we had parents that loaned us $40,000.00 and we paid it off in 10 years, but we also racked up about $70,000.00 more debt with medical bills and business expansion. So I just want to caution you. Life happens. When life happens to the undisciplined (me) it is a financial nightmare!