Help me with my credit card debt and my future

phreerose · November 2013

Hi there nestie's it's been a LONG while. But back when I used to hang out on these boards you ladies were always really helpful, so here goes.... I got divorced a few years ago and then was laid off from my job shortly after that. I freelanced for awhile and finally got a FT good paying job earlier this year. All of that along with some unexpected medical bills (when I had no insurance) put me in a position where I now have about $12K in credit card debt, I KNOW it makes me sick to think about it.

Anyway would love some advice for the smartest way to pay this down. Right now it's on a card with a 6.5% APR. But I have a balance 14 month 0% APR balance transfer offer, which goes to 11% after the offer is over. My current budget allows me to put $550 per month into debt, saving or my ROTH. I also have nothing in savings nor have I put anything in my Roth in a few years.

So what's the best plan of action here? How should I go about taking advantage of the 0% offer and do I even bother with savings or the ROTH at this point?

hoffse · November 2013

If it were me I'd take a couple months and get at least $1000 in an e-fund. That will cover you for most un-budgeted expenses (car repairs, etc.) that may crop up before you can pay this credit card debt down.

Do the 0% balance transfer for as long as you can. You should have paid down more than half of it after putting $1000 into savings before this offer expires. Call the credit card company and they will be able to talk you through it.

Once the expiration date is approaching I might look and see if you can find another card that will do it for the time period you still need to get it paid down (12 months-ish ought to do it).

Then turn your attention to savings and retirement.

Also, I would take this time to really evaluate my expenses and see what you can spare to put toward retirement and savings.

Another question - how old are you? I'm asking because of retirement.

phreerose · November 2013

Interesting. I was thinking of only transferring as much as I know I can pay down, because I don't want to get stuck at 11% with the rest of it.

I'm 35. I'm also already very much on a bare bones budget already. No cable, no car, etc.

hoffse · November 2013

Well the transferring thing is interesting. Plenty of credit cards do it if you can qualify for them. So if you transferred all of it, you might transfer the balance to a new 0% balance transfer card once the current one expires. Then you aren't paying interest on any of it.

Of course, there's always a possibility that it doesn't work out the way you might plan. But I would take a look around and see how many 0% balance transfer cards there are right now and get a sense of whether it would work.

hoffse · November 2013

Or perhaps only transfer the portion you know you can pay and then look for another 0% card when this offer is expired. You would be paying 6% on the half you didn't transfer, but it would only amount to three or four hundred dollars when all is said and done. It might be better than getting caught with that second half at 11% if you can't find a new card to transfer it to.

Help me with my credit card debt and my future

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