Debt paydown; can't find old threads.

[nidena]

My house sale closes tomorrow.  The breakdown shows me netting $17100.

My current debts:

Visa $18600 @ 10.4%
AmEx $4800 @ 12.4%
SL A $2650 @ 4.8%
SL B $3440 @ 4.8% (combined SL monthly payment is $67)
Vehicle $24600 @ 4.34%

I will free up ~$1250/mo with this sale, excluding April 1st which will be ~$1100 since I'll still have a couple final utility bills to pay.

So, obviously, the first thing to go will be the AmEx which leaves me $12300 to throw at the Visa. That'll leave me a balance of ~$6300 on the Visa.  Minus the $1100=$5200.

That doesn't include the $500/mo that I've already budgeted towards CC payments.

My question is: at what point does it make sense to redirect payments to what would eventually be a larger balance?  Like, come August, the CC would be less than $1000.  Should I start then putting the lion's share of payments towards the SLs or vehicle?  Should I redirect to savings?

Trad IRA $9500
Mutual Fund $1000
Annuity $5300
3-6 month savings $390
Cruise savings $360
Fairly dormant savings $50 (the three small savings accounts are <1% rates)

I'd be working with $1700-$2000/mo to pay things off.

[tskeeter]

I wouldn’t pay off the student loans or the car loan early.  They all have interest rates below 5%.  Historically, those are pretty low rates.  

After the credit cards are paid off, I’d take what you were putting toward the credit cards and apply it toward some other priorities.  First, I’d pump up the savings/emergency fund until you have six months of expenses.  Then I’d work on retirement savings.  I’d split the retirement contribution 50/50 between taxable and tax deferred accounts.

[Tiny]

First I'd get the CCs are paid in full and not accruing interest (even if I had to tough out a month of not using the cards to stop the interest accruing).

I'd come up with a reasonable monthly spending plan - one were I could pay any credit card bills in full each month.  I wouldn't want to be 'saving' money while spending on credit card interest. 

If I had $1500 per month AFTER I had all my expenses covered I'd probably so something like this: 

Year ONE:
I'd put $500 per month towards retirement savings, $500 a month into an account I would call "6 months expenses Account" and then $500 I'd send with the minimum to SL A. When SL A was paid off I'd send the total amount I was paying to it - to SL B until it was paid off.
At the end of Year ONE: I guesstimate in 12 months the SLs would be paid off and  there'd be 6K in the "6 month expense Account" and there's be  6K in the retirement accounts.

Year TWO:
I'd put $500 per month towards retirement savings and $1000 into the 6 months expenses Account. I'm gonna guesstimate that 6 months expenses is 18K. At the end of Year TWO there would be another 6K in retirement accounts AND 18K in the now fully funded  6 month Expenses account (maybe 3K in savings and then 3 $5,000 CDs)

Year THREE:
I'd put $1500 a month towards "retirement savings" and BAM! I'd be  saving $18K per year for "retirement".  

Every year after Year THREE:   $1500 a month allocated towards either retirement savings OR replenishing the 6 month fund (if you had to use it)   Maybe drop this back to $1k a month depending on how much you want to save for retirement... and how stable your 6 month expense fund stays.  

I'd just keep paying the regular old Car payment as required by the loan. I'd guesstimate by the end of Year THREE: you've got 24 months or less of payments. When the loan is paid off, I would NOT add the car payment back into your "spending money" - I'd bump the your $1500 a month to $2000 and put the extra into savings (for the next car or some other something you want to buy).

I'm not a big fan of the "feast or famine" method of budgeting...too much drama for me. 
Basically, what I'm suggesting is just allocate a flat amount from your monthly income that you will forever and always allocate to your financial goals. You will NEVER not pay this. It's a bill or a "Tax" that you MUST pay. The rest of your income/money - you can do budget how ever you want.    

Doing something like this removes a lot of drama from one's finances. you always know how much you can spend while still meeting your long term goals and keeping your interest expenses low or non-existent.

[azucena]

I like Tiny's plan except I think he/she missed that you still have a CC balance left to conquer after the initial payments from your house sale.

I'd also consider the current economic environment and your employment - is it stable? Like really, really stable? Because that's key right now.  If you have any doubt, I'd sit on the cash for a couple months to see how things shake out.  This assumes that you can really sit on it and not spend a dime of it.

[giramomma]

I'm also wondering about your housing situation. Weren't you planning to move in with someone? I've forgotten exactly.

[haapai]

I'm a bit confused by your question since I was under the impression that your income was steady as a rock.  Have I missed something?  Is there an upcoming loss of income that is the reason why you are considering holding onto cash or allocating payments in manner that will minimize your required debt payments? 

[nidena]

Mar 31, 2020 7:32:36 GMT -5 giramomma said:

I'm also wondering about your housing situation. Weren't you planning to move in with someone? I've forgotten exactly.

I was and I did.  That was in October.  In January, I moved again.  <insert any "I told you so" in here lol>

My income is steady. Currently:
~$1800 military pension
~$1700 disability

I haven't actually worked since October because I was in BFE (and not far from TheOtherMe ) from the end of Oct until the move in Jan.  I started a new part-time two weeks ago and then, well, the world fell apart.  

Anyhow, my actual living expenses are ~$1700/mo from what I can tell.  And that includes ~$110 going to two of the small savings accounts.

[The Walk of the Penguin Mich]

Can you contribute to an IRA with unearned income?  I know you cannot with disability, not sure about pension.  

[phil5185]

Visa $18600 @ 10.4%

AmEx $4800 @ 12.4%
SL A $2650 @ 4.8%
SL B $3440 @ 4.8% (combined SL monthly payment is $67)

Vehicle $24600 @ 4.34%

$3500/mon income

The 3 low income loans are 'keepers', very inexpensive use of some one else's funds. I would keep all of them for the full term, ie no prepayments.

As for the $23,400 debts - I would sell the $5300 annuity, sell the $1000 MF, and then put everything onto the two expensive loans.

Start an investment index fund and load it monthly.  The idea is to stop paying 10% & 12% to someone else and start earning 10% or 12%  for yourself.

[nidena]

Mar 31, 2020 14:13:16 GMT -5 phil5185 said:

Visa $18600 @ 10.4%

AmEx $4800 @ 12.4%
SL A $2650 @ 4.8%
SL B $3440 @ 4.8% (combined SL monthly payment is $67)

Vehicle $24600 @ 4.34%

$3500/mon income

The 3 low income loans are 'keepers', very inexpensive use of some one else's funds. I would keep all of them for the full term, ie no prepayments.

As for the $23,400 debts - I would sell the $5300 annuity, sell the $1000 MF, and then put everything onto the two expensive loans.

Start an investment index fund and load it monthly.  The idea is to stop paying 10% & 12% to someone else and start earning 10% or 12%  for yourself.

The $1000 has been my EF since taking Dave Ramsey FPU a decade ago.  Since I never have an "emergency" in which I pull from it instead of just using the CC, I guess it doesn't make sense to keep it.
Where does someone who knows very little about investing start?  Is there a company I can call and say "Hey, I'd like to start investing" that is bound to my interests and not theirs?

[The Walk of the Penguin Mich]

Mar 31, 2020 14:22:26 GMT -5 nidena said:

Mar 31, 2020 14:13:16 GMT -5 phil5185 said:

Visa $18600 @ 10.4%

AmEx $4800 @ 12.4%
SL A $2650 @ 4.8%
SL B $3440 @ 4.8% (combined SL monthly payment is $67)

Vehicle $24600 @ 4.34%

$3500/mon income

The 3 low income loans are 'keepers', very inexpensive use of some one else's funds. I would keep all of them for the full term, ie no prepayments.

As for the $23,400 debts - I would sell the $5300 annuity, sell the $1000 MF, and then put everything onto the two expensive loans.

Start an investment index fund and load it monthly.  The idea is to stop paying 10% & 12% to someone else and start earning 10% or 12%  for yourself.

The $1000 has been my EF since taking Dave Ramsey FPU a decade ago.  Since I never have an "emergency" in which I pull from it instead of just using the CC, I guess it doesn't make sense to keep it.
Where does someone who knows very little about investing start?  Is there a company I can call and say "Hey, I'd like to start investing" that is bound to my interests and not theirs?

No one will ever take as good care of your as you.  Start reading and learning while you are accruing your initial investment.

[nidena]

Mar 31, 2020 14:41:04 GMT -5 The Walk of the Penguin Mich said:

Mar 31, 2020 14:22:26 GMT -5 nidena said:

The $1000 has been my EF since taking Dave Ramsey FPU a decade ago.  Since I never have an "emergency" in which I pull from it instead of just using the CC, I guess it doesn't make sense to keep it.
Where does someone who knows very little about investing start?  Is there a company I can call and say "Hey, I'd like to start investing" that is bound to my interests and not theirs?

No one will ever take as good care of your as you.  Start reading and learning while you are accruing your initial investment.

Okay.  So what do I need to know?

[haapai]

Let's start with "Don't carry double-digit credit card debt unless you are terrified about not being able to make ends meet."  Basically, you have to be facing homelessness, insolvency, or a reasonable possibility of bankruptcy in order to violate that rule. 

Since that obviously does not apply to you, pay off your credit cards. 

[nidena]

Mar 31, 2020 15:04:50 GMT -5 haapai said:

Let's start with "Don't carry double-digit credit card debt unless you are terrified about not being able to make ends meet."  Basically, you have to be facing homelessness, insolvency, or a reasonable possibility of bankruptcy in order to violate that rule. 

Since that obviously does not apply to you, pay off your credit cards. 

Most of the debt incurred in the past nine months was in preparation of moving, actually moving, living in a rural area and having to travel to buy anything, moving again, prepping the house to be sold, and (for the past two months) maintaining two sets of living expenses.  Thankfully, the next move won't be from Delaware to Iowa to Indiana.  It'll be in-town and I won't need to fix anything in the apartment I'm renting.

[The Walk of the Penguin Mich]

Mar 31, 2020 14:48:30 GMT -5 nidena said:

Mar 31, 2020 14:41:04 GMT -5 The Walk of the Penguin Mich said:

No one will ever take as good care of your as you.  Start reading and learning while you are accruing your initial investment.

Okay.  So what do I need to know?

I have no idea what you know or do not know.  There are tons of investment sites you can check out, just start reading and you can easily see which ones are giving advice and which ones are trying to sell products. 

When I got my pension payout after leaving my job in TX, I parked the money in a money market account with Fidelity until I could figure out how to invest it.  It took me 6 months of reading about how to invest before I started to shift money into investment accounts.  

[haapai]

I am not accusing you of being profligate.  Far from it, you appear to have one of the healthiest disposable incomes of anyone that I know.  If the fixed expense numbers that you have posted are accurate, you appear to be living on less than half of your income.  Even if this number does not include taxes and a whole lot of other stuff, you still appear to be living well below your means.

I'm just absolutely baffled why you continue to ask similar questions regarding what debt to pay off first.

FWIW, finding your old threads is not hard.  Just click on the "Profile" link any time that there isn't a little flag there.  Then scroll down a bit and click on the second of two links with blue font.  It will be titled "view this member's recent threads'. 

[mary2029]

Mar 31, 2020 14:48:30 GMT -5 nidena said:

Mar 31, 2020 14:41:04 GMT -5 The Walk of the Penguin Mich said:

No one will ever take as good care of your as you.  Start reading and learning while you are accruing your initial investment.

Okay.  So what do I need to know?

I know of four types of investment vehicles: 
401K: if you have a job that supports this program.  Not applicable to you.
ROTH:  You can put up to 6/7K for 2019 and 2020 on earned income for that year. For 2019, the deadline to contribute is April 15th (unless it's been extended).  For 2020, sounds like it would be minimal/no income so far.  Post tax contributions, but any earnings and withdrawals are tax-free (typically). 
529:  For schooling purposes. I don't know much about these.
Taxable account: Post tax contributions and you need to pay taxes on gains. 

You can set up a ROTH account and taxable account through multiple investment firms. This group typically suggests Vanguard or Fidelity. 

As to what you want to invest in, that's going to be your call. You can follow the market, you can follow a retirement fund by date, you can diversify between stocks, bonds, real estate, etc. There are investment companies that set you up on how you should invest. Like Mich said, you need to do some research. 

[nidena]

Mar 31, 2020 15:24:40 GMT -5 haapai said:

FWIW, finding your old threads is not hard.  Just click on the "Profile" link any time that there isn't a little flag there.  Then scroll down a bit and click on the second of two links with blue font.  It will be titled "view this member's recent threads'. 

Thanks.  Never realized that was there.

[haapai]

Mar 31, 2020 15:36:35 GMT -5 nidena said:

Mar 31, 2020 15:24:40 GMT -5 haapai said:

FWIW, finding your old threads is not hard.  Just click on the "Profile" link any time that there isn't a little flag there.  Then scroll down a bit and click on the second of two links with blue font.  It will be titled "view this member's recent threads'. 

Thanks.  Never realized that was there.

No sweat.  That's an easy feature to find, explain, and not forget how to find again.  It's just a matter of knowing where to stab.  OTOH, there's a tagging feature here that still baffles me.  Many have attempted to explain it to me.  Every time that I attempt it, things go flooey, 

[nidena]

Mar 31, 2020 14:13:16 GMT -5 phil5185 said:

Visa $18600 @ 10.4%

AmEx $4800 @ 12.4%
SL A $2650 @ 4.8%
SL B $3440 @ 4.8% (combined SL monthly payment is $67)

Vehicle $24600 @ 4.34%

$3500/mon income

The 3 low income loans are 'keepers', very inexpensive use of some one else's funds. I would keep all of them for the full term, ie no prepayments.

As for the $23,400 debts - I would sell the $5300 annuity, sell the $1000 MF, and then put everything onto the two expensive loans.

Start an investment index fund and load it monthly.  The idea is to stop paying 10% & 12% to someone else and start earning 10% or 12%  for yourself.

I called to inquire about selling the Annuity.  Apparently, it's one that can't be sold BUT after seven years from its initial contract date, I can withdraw all funds.  That being said, that seven years is only three years away so I'll stick it out until then and then put that money in whatever I'm putting my money in at that time.

[NoNamePerson]

Mar 31, 2020 15:36:35 GMT -5 nidena said:

Mar 31, 2020 15:24:40 GMT -5 haapai said:

FWIW, finding your old threads is not hard.  Just click on the "Profile" link any time that there isn't a little flag there.  Then scroll down a bit and click on the second of two links with blue font.  It will be titled "view this member's recent threads'. 

Thanks.  Never realized that was there.

You can also bookmark a thread if you want to keep track of it. Of course, every time someone post in that thread it will show up in the notifications button. You can also remove bookmark. If you already knew this the never mind   

Back to regularly schedules program. Sorry for going OT.

[nidena]

Apr 1, 2020 6:52:12 GMT -5 NoNamePerson said:

Mar 31, 2020 15:36:35 GMT -5 nidena said:

Thanks.  Never realized that was there.

You can also bookmark a thread if you want to keep track of it. Of course, every time someone post in that thread it will show up in the notifications button. You can also remove bookmark. If you already knew this the never mind   

Back to regularly schedules program. Sorry for going OT.

That, I did do.  I want to have the suggestion that Tiny suggested easily accessible until I can implement it.