dreamover Posted January 29, 2013 Author Share Posted January 29, 2013 I'm wondering why you answered this the way you did. Because in my mind, wouldn't it make more sense to pay it off at once so you don't have to pay interest on the gradual payments? Also, won't your credit score be better by making full payments every month? Not trying to start an argument, I'm actually wondering it all depends on your credit history and your age and what your goal is. if you can pay it off right away and keep using it and paying it off every month then that is best. if you don't plan on using it again after you pay it off, it's good to get some payment history, especially if that is your only card. Quote Link to comment Share on other sites More sharing options...
dreamover Posted January 29, 2013 Author Share Posted January 29, 2013 Yikes there is some questionable advice in here. Pay the credit card down as quick as you can. The best way to manage a credit card is to put a couple small purchases on it each month and pay them off immediately. Carrying a large balance over time does not help: http://www.ehow.com/info_8134559_better-balance-improve-credit-score.html TAYF, why would you fuck with a 401k for a mortgage? Do you absolutely HAVE to buy right now and have no down payment. The problem of whether it is better to put your money into a 401K or to pay extra on a mortgage has been well researched. The correct answer in almost every case is to put your money in the 401K. The reason is simple -- You get to invest your money pretax, or put it towards a mortgage you can write the interest off on. So that 3.5% mortgage actually ends up costing even less. So you should leave that money (and keep contributing to the 401K), then save for a downpayment outside of that. If there is some situation in your life that requires you to buy right away, then yeah, listen to these guys on the best way to do it. But from a long term perspective, it's not a great move. i think we understood the question differently. but i clarified, if it is better to have payment history. it's never good to have large balances on it. it IS better to pay it down and keep using it and to continue paying it off every month. Quote Link to comment Share on other sites More sharing options...
thebiglebowski Posted January 29, 2013 Share Posted January 29, 2013 i think we understood the question differently. but i clarified, if it is better to have payment history. it's never good to have large balances on it. it IS better to pay it down and keep using it and to continue paying it off every month. Sure man. I think you understand the credit score well. Your answer was just very misleading. Step #1 to any financial planning question ever -- pay off the credit cards and use them to buy something small each month, then pay them off. Even with the zero interest stuff, it's a sucker's trap and should only be relied on short term for special cases. dreamover 1 Quote Link to comment Share on other sites More sharing options...
kgry Posted January 29, 2013 Share Posted January 29, 2013 I've got a lot of credit card debt between two cards which I never use anymore. I know there are consolidation programs out there. What am I better off doing, keep paying each off or can I save by consolidating? Really want to pay these off in the next 10 years. Quote Link to comment Share on other sites More sharing options...
dreamover Posted January 29, 2013 Author Share Posted January 29, 2013 I've got a lot of credit card debt between two cards which I never use anymore. I know there are consolidation programs out there. What am I better off doing, keep paying each off or can I save by consolidating? Really want to pay these off in the next 10 years. i can't speak much about the programs advertised on daytime tv. i'd say proceed with caution when dealing with anything like that. if you are someone who struggles with credit cards, and once you pay them down you are tempted to use them again, i'd suggest trying to get a installment loan with manageable payments you can budget and never use the credit cards again. you will almost certainly get a lower interest rate. stay away from lines of credit for consolidation because the temptation will still be there. If an installment loan isn't an option. You want to make sure you are making more than minimum payments on all your cards (even if it's just a few bucks) and pay the most to the card with the highest interest rate. Quote Link to comment Share on other sites More sharing options...
thebiglebowski Posted January 29, 2013 Share Posted January 29, 2013 How much credit card debt do you have that you think you need 10 years to pay it off? These might help: http://www.nbcnews.com/id/31447531/ns/business-answer_desk/t/how-get-out-under-credit-card-debt/#.UQgVVCeYtAU http://www.fool.com/personal-finance/credit/60-second-guide-to-getting-out-of-debt.aspx Quote Link to comment Share on other sites More sharing options...
kgry Posted January 29, 2013 Share Posted January 29, 2013 I haven't used the any card in over 4 years. Don't even have cards, I cut them up. I have no problem paying the minimum balances off per month. I just don't feel like I'm making up any ground here. I screwed up when I was younger, enough said. Could have used the money as a down payment on a house by now. Thanks for the links and I'll look into the installment loan. Where do I start? Quote Link to comment Share on other sites More sharing options...
dreamover Posted January 29, 2013 Author Share Posted January 29, 2013 I haven't used the any card in over 4 years. Don't even have cards, I cut them up. I have no problem paying the minimum balances off per month. I just don't feel like I'm making up any ground here. I screwed up when I was younger, enough said. Could have used the money as a down payment on a house by now. Thanks for the links and I'll look into the installment loan. Where do I start? as i said before. it will more be better for your credit score if you pay more than minimum, even if its a couple bucks. talk to legitimate banks in applying for an installment loan. go somewhere you already bank, cause they'll know you. i wouldn't recommend going anywhere else. and if you don't get approved or the rate is too high, you'll have to work on paying down as much (start with the card with highest interest) debt as you can and try again in six months. DO NOT miss any installment loan payments if you have any. Quote Link to comment Share on other sites More sharing options...
maneatingcow Posted January 29, 2013 Share Posted January 29, 2013 www.creditkarma.com creditkarma.com is a great website if your looking at working down debt. You are able to get a daily soft check of your Transunion credit score, along with your Auto Insurance score and your Vantage score. They have a ton of helpful tools, my favorite is the credit simulator. You can enter in a ton of different scenarios and they will give you a ROUGH estimate of what would happen to your credit score. Most of the info on there is simple, but with me trying to pay down CC debt as quickly as possible it's nice to daily check my score and see the improvement I'm making. In my first month of paying down debt, my Transunion score has went up 20 points and my Vantage score has went up 30. Quote Link to comment Share on other sites More sharing options...
circuit bored records Posted January 29, 2013 Share Posted January 29, 2013 Dosen't a soft check still have an effect on your score though? Quote Link to comment Share on other sites More sharing options...
thebiglebowski Posted January 29, 2013 Share Posted January 29, 2013 KGRY, you neglected to say how much you owed (which is fine. Personal information). But if you really are on a 10 year plan to pay off your credit cards, you are in the territory where you might want to consider this: http://www.youtube.com/watch?v=hiCilTzhXrA Don't worry about your credit score. Worry about working your ass off for 10 years and pissing 30% of it away in interest. Plenty of people lead fine lives without ever even needing a credit score. It's way over glorified. Quote Link to comment Share on other sites More sharing options...
maneatingcow Posted January 29, 2013 Share Posted January 29, 2013 http://www.myfico.com/crediteducation/questions/inquiry-credit-score.aspx "As far as your FICO® score is concerned, credit inquiries are classified as either "hard inquiries" or "soft inquiries" – only hard inquiries have an affect on your FICO score." Only hard checks affect it. I applied for a loan at the beginning of the month and that dropped my score by 2 points, but my daily soft checks don't affect it. Quote Link to comment Share on other sites More sharing options...
thebiglebowski Posted January 29, 2013 Share Posted January 29, 2013 Dosen't a soft check still have an effect on your score though? Maneatingcow covered the basics but a soft hit means "I am checking in on my score like a fiscally responsible person". Hard hits (when actually applying for credit) reduce your score as a means of preventing someone in a financial crisis from going credit crazy over a couple day period and racking up hundreds of thousands in credit. Hard hits are inevitable and no big deal. What's the point of having a high credit score if you don't use it? What you don't want to do is rack up more than a couple hard hits in a year (so might not be the best idea to buy a car, house, boat, open a credit card, etc all in the same year...which could very likely signify someone going spend crazy). Quote Link to comment Share on other sites More sharing options...
dreamover Posted January 29, 2013 Author Share Posted January 29, 2013 Maneatingcow covered the basics but a soft hit means "I am checking in on my score like a fiscally responsible person". Hard hits (when actually applying for credit) reduce your score as a means of preventing someone in a financial crisis from going credit crazy over a couple day period and racking up hundreds of thousands in credit. Hard hits are inevitable and no big deal. What's the point of having a high credit score if you don't use it? What you don't want to do is rack up more than a couple hard hits in a year (so might not be the best idea to buy a car, house, boat, open a credit card, etc all in the same year...which could very likely signify someone going spend crazy). this is all true. but if you're on the cusp (around 680) of being able to get approved for things, you definitely don't want to be making too many hard hits. Quote Link to comment Share on other sites More sharing options...
kgry Posted January 29, 2013 Share Posted January 29, 2013 KGRY, you neglected to say how much you owed (which is fine. Personal information). But if you really are on a 10 year plan to pay off your credit cards, you are in the territory where you might want to consider this: http://www.youtube.com/watch?v=hiCilTzhXrA Don't worry about your credit score. Worry about working your ass off for 10 years and pissing 30% of it away in interest. Plenty of people lead fine lives without ever even needing a credit score. It's way over glorified. LOL, love that episode. Yeah I'm not really willing to disclose the amount but it's a lot to me. I thought about doing that 10 years ago when life really sucked. But I'm saving some good money every month and can easily pay all my bills. I guess I need to pay more towards the payments instead of saving. Like you've said, just deal with it till it's paid. Quote Link to comment Share on other sites More sharing options...
dreamover Posted January 29, 2013 Author Share Posted January 29, 2013 LOL, love that episode. Yeah I'm not really willing to disclose the amount but it's a lot to me. I thought about doing that 10 years ago when life really sucked. But I'm saving some good money every month and can easily pay all my bills. I guess I need to pay more towards the payments instead of saving. Like you've said, just deal with it till it's paid. This is just an opinion, but if you have a lot of credit card debt, it makes little sense to save. i guarantee the credit card interest far outweighs the interest you're earning on your savings account. Once you have your debt paid off, you'll be in a much better place to start saving. Quote Link to comment Share on other sites More sharing options...
dreamover Posted January 29, 2013 Author Share Posted January 29, 2013 I'm glad some people like lebowski are weighing in. it's good not to take just one person's advice. but any sound advice is better than trial/error. Quote Link to comment Share on other sites More sharing options...
maneatingcow Posted January 29, 2013 Share Posted January 29, 2013 I'm not really in the same position as you but something similar. My credit card debt balloons then I pay it down then it'll balloon up again. As of the 1st of the year it was sitting at $4800 or so. Nothing to ridiculous, but perhaps it's ridiculous that I spend so much money foolishly. I've decided I want to buy a house when my Lease runs out on my apartment so now I've got myself on a budget and have cut out all non-essentials (with a few lifestyle caveats) Almost done with my first month and out of standard payroll checks I've put $800 onto my debt. Along with another $400 from a bonus at work and I'm now just sending out another $550 from records sold. Honestly, it just feels great paying down and seeing how quickly I can do it. It's also a little shitty to think of how much money I wasted over the last few years. I've got myself on a 3 month plan to get out of debt and another 4 months to build up a Down Payment for a very very modest first home purchase. Fun side note while doing research on buying a first home for the first time I found a $5000 grant for First Time Homebuyers in WI. The problem is I am $300 over the maximum allowable wage to qualify. Can I ask my employer to unpay me $301 from last year? Quote Link to comment Share on other sites More sharing options...
maneatingcow Posted January 29, 2013 Share Posted January 29, 2013 What about rotating the Debt to 0% APR cards for x months? I know my brother did that for years, I know it's not going to be great for your credit score but should help save some cash in the short term. Quote Link to comment Share on other sites More sharing options...
kgry Posted January 29, 2013 Share Posted January 29, 2013 I actually just thought of all this today because of this thread. I've had it in the back of my mind for like a year that I wanted to start lowering my credit balances. Currently credit score isn't on my mind, I own my truck and no way I'm getting a house any time soon. I have no loans or anything except credit. I've only been saving for emergency money if needed. Quote Link to comment Share on other sites More sharing options...
thebiglebowski Posted January 29, 2013 Share Posted January 29, 2013 Maneatingcow, you gotta live your life. No need to regret past decisions. If you REALLY want to take finances to an extreme, the best thing you can ever do is not move out of your parent's house and eat ramen noodles all day. You could probably have a couple million saved up by the time you are 40. But what's the point? On the $300, not sure. That would probably be a question for a tax professional. Maybe you could claim casino losses or something? But there are 5000 ways the rich get out of paying taxes (which is a matter of reducing the "total income" on a sheet of paper). There's probably something. If not, you might want to consider holding off and trying to make sure you get it this year. There will still be plenty of houses, you will have more saved up for a down payment, and 5 gees is a lot of money to leave on the table. The 0% APR cards are preferable to paying interest, no doubt. It's just a slippery slope. You can end up shuffling them around constantly until you have a huge balance and then start getting hit with interest. The goal is to get to a steady state where your income matches your expenses (with a little cushion or retirement saving), not to just constantly delay and shuffle debt. In your case, where you have already corrected the spending behavior and just need time to get out of debt, it would make sense. Who cares if your credit score goes down 3 points cause you opened an account if you save $500 in interest? I'd gladly take that tradeoff. It's not gonna drop you 50 points. Quote Link to comment Share on other sites More sharing options...
thebiglebowski Posted January 29, 2013 Share Posted January 29, 2013 Definitely read the fine print, though. Some of those 0% cards are on new purchases only, for example, but they charge a fee for balance transfers. I remember reading about it when I got my first card. Just read the fine print. Don't assume everything is 0%. Quote Link to comment Share on other sites More sharing options...
hipsterasfolk Posted January 29, 2013 Share Posted January 29, 2013 Die with a mortgage is only advice I can offer anyone, basically the banks are knocking on your door throwing money at you for 3.5% to refinance your house into these rates. Take the money and tuck some away and invest the rest. $100k x 10yrs = $1.7mil (depending on your investments etc.) I don't know about you guys but $1.7mil is a decent chunk of change Get rich or die stupid Quote Link to comment Share on other sites More sharing options...
Guest Posted January 29, 2013 Share Posted January 29, 2013 thank god... or satan, or whoever for this thread. Quote Link to comment Share on other sites More sharing options...
xfedupx Posted January 29, 2013 Share Posted January 29, 2013 Fun side note while doing research on buying a first home for the first time I found a $5000 grant for First Time Homebuyers in WI. The problem is I am $300 over the maximum allowable wage to qualify. Can I ask my employer to unpay me $301 from last year? I'm not a professional, but definitely look into this, you have until April to put money into an IRA for 2012. A traditional IRA is pre tax, so if you put the minimum you can into that (depends on who you'll use), that should lower your Gross income. I'm not sure how it works since tax forms will be sent out or if it's even smart to do that for a short term gain like the grant money. Maybe TBL or Dreamover can weigh in on this one Quote Link to comment Share on other sites More sharing options...
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