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I know the consensus on marriage from lurking these forums, but all arguments regarding that topic aside, here's my situation.

Getting married in a month. Future wife has zero CC debt, credit score around 750, and is overall in good shape.

I'm in considerably worse shape. I have completely cut out all unnecessary purchases, and have been living very frugally for the past 3 months. Eliminating the debt has become my #1 priority, but unexpected car bills, and living beyond my means for my single years has caught up with me...

Credit score - 743
Savings - $0

My take home - $3150 monthly
Rent - $1150 monthly. This is a huge portion of my take home, but I moved into this place in December, thinking ahead to when we get married in June (she doesn't live with me currently).

Car - $5500 balance, 4.99% - $227 monthly payment
Car's worth about $9000 selling private party, so I'm not upside down, and I bought it used in 2009. Major maintenance was just completed, so no more money should need to be spent on it for the foreseeable future beyond oil changes and routine maintenance.

Utilities/Bills - $285/month
Student Loans - $350/month, various APRs, max is about 6%. These loans are already consolidated, and are through 3 lenders, 2 private, and federal.

CCs:
Chase Sapphire
Balance - $4000
APR - 12.24%

Discover
Balance - $2780
APR - 0.0% (balance transfer, it expires in Nov. 2012)

Jeweler's Card through Wells Fargo Financial (engagement ring)
Balance - $3200
APR - 0.0% (19 months no interest financing, contingent on $357 monthly payment)

I have 3 other cards, all with zero balances. 2 of which are recently opened. Adding all of this up. I'm left with about $600 a month to feed me, clothe me, and gas up my car (which requires premium octane), plus any unforeseen expenses. Any extra income remaining at the end of a pay cycle (not much) has been dumped onto a card to lower the balance.

My plan(s):
1) Open Chase Slate, transfer total balances from all three cards (pending approval & limit of course)
0.0% APR on balance transfers for 15 months
With my wife's income coming into the picture in a month, this should allow a considerable load to be taken off my shoulders, and focus more on paying down the debt.

If that's not aggressive enough;

2) Sell car, use proceeds to pay cash for a considerably cheaper used car.

Proceed with plan 1, and use additional funds from car payment savings to attack the debt faster.

Regardless of which plan I go with, I expect the debt to be payed off completely within the 15 month promotional period offered by the Slate card.

I've gotten a lot of great info from reading on here, and I just wanted to see if the plan I pieced together fits with what the majority of you think, or if there's any advice (again, other than not getting married) that could help me.

Member Summary
Most Recent Posts
Stop screwing around with credit cards. They;re part of your problem. Cut up the 3 you have without balances and start p... (more)

svendsenaaron (May. 04, 2012 @ 12:38p) |

OP has already shown that he understands budgeting, credit, and past mistakes. He doesn't need the Dave Ramsey koolaid. ... (more)

Revike (May. 04, 2012 @ 6:08p) |

try lendingclub.com. They'll consolidate your debt

ahmadcpa (May. 04, 2012 @ 10:29p) |

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Honestly, I don't think you're in such bad shape. Bite the bullet for the next few years and get the debt paid down (or off) per your plan. Your APR on your car loan is high - maybe a 0% BT check could offset some of the pain here as well? I don't like $4K on the engagement ring vs. your salary, but to each his own. This doesn't seem like anything you can't manage with a few years of frugality and a payment plan, as you've surmised.

And DON'T overspend on the wedding, whatever you do. A small gathering can be lovely.

I would not sell the car. Say you sell it and get 9k. You have 3.5k left over after paying off loan. You going to put 3k on debt and buy a 500 car? That will put you in worse shape when that car dies and you have to buy a new one with zero down.

Unless the car you have is a complete bomb mechanically, I would keep it.

parmenides said:   I don't like $4K on the engagement ring vs. your salary, but to each his own. This doesn't seem line anything you can't manage with a few years of frugality and a payment plan, as you've surmised.

Well then I probably shouldn't tell you that it's almost half paid off, and I put 20% down in cash... I agree, I splurged. See the statement about living beyond my means...

1) Pics of her?

2) You should have bought a Crown Vic!

3) Run Forrest Run, don't get married!

Ok now that the obligatory FWF messages are out lets get down to business!

1) Don't sell the car. Since you just did a major maintenance, I doubt you can recoup the cost of the mainetance in an immediate sale. Keep it.

2) Getting approved for a 0% APR card and transfering balance from Chase Sapphire is a better idea. Even if you get approved for a low CL as long as you can get the Sapphire balance off to 0% you are in good shapre since your Discover and Jewellery balances are at 0%. You still have 6 months on Discover (if need be you can re-apply for a 0% card in 6 months). Not sure how long ago your ring purchase happened, but in 19 months you should be debt free assuming your budget allows the $357 monthly payments.

3) I am assuming you are doing all the other checks and balances - cutting down on non-sense stuff, going for cheaper phone options (VOIP - OOMA etc), cut down on cable etc (TV that is, not internet), etc.

Good luck!

What does your future wife have to say about your plan? Does she have savings to pay off your CC debt?

newbietx said:   2) Getting approved for a 0% APR card and transfering balance from Chase Sapphire is a better idea. Even if you get approved for a low CL as long as you can get the Sapphire balance off to 0% you are in good shapre since your Discover and Jewellery balances are at 0%. You still have 6 months on Discover (if need be you can re-apply for a 0% card in 6 months). Not sure how long ago your ring purchase happened, but in 19 months you should be debt free assuming your budget allows the $357 monthly payments.
Interesting points here... I bought the ring in July '11, so 19 mos. puts me at Feb. '13. I can swing the payment, and have been for some time now, so I'm not concerned there. I am concerned however about the Discover balance. $2800 to be paid off in 7 mos. seems tight for me, however, I don't know what my situation will be in a month's time regarding spare income. We really need to establish a rainy day/emergency fund too. Maybe it would benefit me to leave the ring balance alone, and just transfer the Discover & Sapphire balances over. After all, there's no balance transfer fee with Slate, and 0.0% w/ Discover = 0.0% with Slate, plus I double the months I have to pay it off without penalty, or opening yet another card.

weler's Card through Wells Fargo Financial (engagement ring)
Balance ~ $4000
APR - 0.0% (19 months no interest financing, contingent on $357 monthly payment)

Seems like this will be a problem for you going forward. You are already in debt, the ring could have waited. Do not over spend on the wedding

What kind of car do you have that requires premium octane? I can honestly say that many times this is not needed (my friend is an Audi tech who laughed when I originally asked him about the requirement) but YMMV..

Jamieson22 said:   What does your future wife have to say about your plan? Does she have savings to pay off your CC debt?
I wondered when this would come up. We've had lengthy discussions about it, and we've arrived at the following:

Any money we make from relatives from the wedding can be applied to the balance on the Disco (or equivalent total if I transfer it). That was debt I had acquired through the years.

The Sapphire debt is mostly new debt, and the ring I obviously don't feel that she needs to help me pay for, so that I'll be tackling while trying to have as little impact on her as possible.

At the same time however, our goal in the medium term is to buy a house (this is a whole new thread). It would do us well to eliminate debt as soon as we can, and then build up a down payment over the next 18 months.

Penfed auto refi. You can get a loan for the value of the car(9k) at 1.99% or so. Pay off the 5k auto loan. Use the other 4k to pay off the majority of your big interest loans.

sigson said:   What kind of car do you have that requires premium octane? I can honestly say that many times this is not needed (my friend is an Audi tech who laughed when I originally asked him about the requirement) but YMMV..
It's a Saab 9-2X Aero. I have the engine tuned for running on 93 octane. Yeah it unlocked ~40 more horsepower, but that was when premium was barely cresting $3.00 a gallon...

imbatman said:   Penfed auto refi. You can get a loan for the value of the car(9k) at 1.99% or so. Pay off the 5k auto loan. Use the other 4k to pay off the majority of your big interest loans.
I've seen this in another thread that you posted in while lurking. How does this affect the title of the car? If I pay off the loan through my Credit Union with the PenFed loan, do I get the title, or does it get transferred to PenFed for them to hold for collateral while I pay for another 5 years? Plus, would this really save me that much in the long run vs. just refinancing the $5500 and going to 0% for the CC balances? The remaining $4000 of the PenFed loan wouldn't cover any of the student loan balances completely.

Have you looked into changing your W4 numbers?

At the end of the year you will be filing either married jointly or separate, but either way your portion of the taxes might be less (or more?).

You might want to see doing a 2011 mock-up tax file on Turbo Tax with both of your 2012 numbers, and then going to the IRS Withholding Calculator to see how the marriage would affect your 2012 taxes and change the W4 accordingly.

IIRC (many years ago) the year of our wedding we paid less than the combined amount for both of us the previous year.

USScouser said:   I know the consensus on marriage from lurking these forums, but all arguments regarding that topic aside, here's my situation.
You have nothing to fear from this forum regarding your upcoming nuptials. Your wife on the other hand might be advised against it.

USScouser said:   imbatman said:   Penfed auto refi. You can get a loan for the value of the car(9k) at 1.99% or so. Pay off the 5k auto loan. Use the other 4k to pay off the majority of your big interest loans.
I've seen this in another thread that you posted in while lurking. How does this affect the title of the car? If I pay off the loan through my Credit Union with the PenFed loan, do I get the title, or does it get transferred to PenFed for them to hold for collateral while I pay for another 5 years? Plus, would this really save me that much in the long run vs. just refinancing the $5500 and going to 0% for the CC balances? The remaining $4000 of the PenFed loan wouldn't cover any of the student loan balances completely.


Someone else will need to answer the question on the title. My assumption is that the title gets transferred, but if youre going to pay it off. What does it matter?. The big difference is that when I look at your numbers- I don't think you'll be able to pay off your 0% cc balances durin the promo period. So when 0% goes away you will have another high APR and still have debt. By transferring to 1.99% you won't have that time crunch. its a lower interest rate than all of your other non 0% debts. Consolidate as much as you can at 1.99% if you pay everything else off. Then go after the 1.99% loan. 2 months of 12% apr will be the same interest as a year at 1.99% on the same balance.

imbatman said:   USScouser said:   imbatman said:   Penfed auto refi. You can get a loan for the value of the car(9k) at 1.99% or so. Pay off the 5k auto loan. Use the other 4k to pay off the majority of your big interest loans.
I've seen this in another thread that you posted in while lurking. How does this affect the title of the car? If I pay off the loan through my Credit Union with the PenFed loan, do I get the title, or does it get transferred to PenFed for them to hold for collateral while I pay for another 5 years? Plus, would this really save me that much in the long run vs. just refinancing the $5500 and going to 0% for the CC balances? The remaining $4000 of the PenFed loan wouldn't cover any of the student loan balances completely.


Someone else will need to answer the question on the title. My assumption is that the title gets transferred, but if youre going to pay it off. What does it matter?. The big difference is that when I look at your numbers- I don't think you'll be able to pay off your 0% cc balances durin the promo period. So when 0% goes away you will have another high APR and still have debt. By transferring to 1.99% you won't have that time crunch. its a lower interest rate than all of your other non 0% debts. Consolidate as much as you can at 1.99% if you pay everything else off. Then go after the 1.99% loan. 2 months of 12% apr will be the same interest as a year at 1.99% on the same balance.


just want to add that penfed will lend you 100% of NADA clean retail value of your car without even seeing it. all they need is the title. they will pay off the current lien holder and get the title from them, probably electronically. you will receive a check from penfed for the balance.

what year is your car? you can find out exactly how much penfed will lend by cking the NADA site.

eta: the 1.99% deal is on loans up to 48 month term.

Jamieson22 said:   What does your future wife have to say about your plan? Does she have savings to pay off your CC debt?

Why would future wife pay off his premarital debt? The only load future wife should be taking off his shoulders is her share of the rent when they move in together.

likelocusts said:   Jamieson22 said:   What does your future wife have to say about your plan? Does she have savings to pay off your CC debt?

Why would future wife pay off his premarital debt? The only load future wife should be taking off his shoulders is her share of the rent when they move in together.


because when they get married it becomes their debt, and she doesn't like paying interest charges. same as i paid my wife's CC debt when we got married.

MDfive21 said:   likelocusts said:   Jamieson22 said:   What does your future wife have to say about your plan? Does she have savings to pay off your CC debt?

Why would future wife pay off his premarital debt? The only load future wife should be taking off his shoulders is her share of the rent when they move in together.


because when they get married it becomes their debt, and she doesn't like paying interest charges. same as i paid my wife's CC debt when we got married.


The law seems to disagree if they were to get divorced. You don't marry into premarital debt just as you don't marry into premarital assets.

USScouser, I think you're definitely on the way toward fixing the current debt issue. But there are two questions I have for you.

How old are you? How about the wife?
Do you have any retirement savings? How about the wife?
Depending on the answer you give to these questions, one suggestion would be to delay the purchase of a house until you build up some retirement savings and an emergency fund.

GreyRabbit said:   USScouser, I think you're definitely on the way toward fixing the current debt issue. But there are two questions I have for you.

How old are you? How about the wife?
Do you have any retirement savings? How about the wife?
Depending on the answer you give to these questions, one suggestion would be to delay the purchase of a house until you build up some retirement savings and an emergency fund.


Valid questions.
I'm 25, she's 23. I have a 401K w/ about $6k in it so far (only doing 2% payroll deductions til I get this mess sorted). She does not have a 401k yet, she's still on the honeymoon period w/ her first job out of school. Don't worry, we're happy renting until we're in a position where we're ready. Feeling shackled by debt & house poor is not good. My #1 goal is to not let this happen to me/us again.

imbatman said:   Someone else will need to answer the question on the title. My assumption is that the title gets transferred, but if youre going to pay it off. What does it matter?. The big difference is that when I look at your numbers- I don't think you'll be able to pay off your 0% cc balances durin the promo period. So when 0% goes away you will have another high APR and still have debt. By transferring to 1.99% you won't have that time crunch. its a lower interest rate than all of your other non 0% debts. Consolidate as much as you can at 1.99% if you pay everything else off. Then go after the 1.99% loan. 2 months of 12% apr will be the same interest as a year at 1.99% on the same balance.
You're talking sense here. Clean retail is $9225 on my car per NADA. Eliminate the car loan @ 4.99%, dump the Sapphire balance @ 12.24%, and throw everything at Discover to get it taken care of by November while continuing with the ring payment. A calculator shows that @ 48 mos. my payment will actually drop to $199, and at half to 1/6 the interest rate. Once Discover is gone, which could happen as soon as July depending on the wedding/her benevolence, would the best strategy be to go after the ring with everything, to free up the $357 a month and ease my mind with one less payment, or make double/triple payments on the PenFed loan while utilising the full promotional period on the ring? I've read all sorts of varying advice regarding strategies. Some say lowest balance, some say highest interest. My gut says that the extra $357 a month would benefit us more short term, and could slowly build an emergency fund while still making double payments on the PenFed. Not to mention, just one less bill to pay a month.

Of course, all of this is under the assumption that I'm accepted for the PenFed loan...

The Penfed 1.99% deal just got extended to 60 months.

USScouser said:   imbatman said:   Penfed auto refi. You can get a loan for the value of the car(9k) at 1.99% or so. Pay off the 5k auto loan. Use the other 4k to pay off the majority of your big interest loans.
I've seen this in another thread that you posted in while lurking. How does this affect the title of the car? If I pay off the loan through my Credit Union with the PenFed loan, do I get the title, or does it get transferred to PenFed for them to hold for collateral while I pay for another 5 years? Plus, would this really save me that much in the long run vs. just refinancing the $5500 and going to 0% for the CC balances? The remaining $4000 of the PenFed loan wouldn't cover any of the student loan balances completely.


You put them as a lien-holder and send them the title. They send it back with a lien-release when it's paid off. You can borrow above the value of the car (I think 150% or so).

Keep this in mind also: When I did a PenFed car loan they asked if I wanted their CC too. I was already approved. The good news for you: That card comes with good BT options, so let's say you do the re-fi and also get approved for the card for 5K balance. That will be another 4K or so you can comfortably use to pay down some of the other higher debt.

It it were me, I would try to find a BT offer to pay down that ring and improve your cashflow situation. You have some good ideas, now just time to put them into action.

It seems your planning is based on your current sitution. But how is that changing with your upcoming marriage?

Big things I see are what's the wedding/honeymoon budget and how are you paying for it? Since it sounds like you're keeping seperate finances, how are you splitting up joint expenses like rent, and groceries (1/2 each, proportional)?

csdx said:   It seems your planning is based on your current sitution. But how is that changing with your upcoming marriage?

Big things I see are what's the wedding/honeymoon budget and how are you paying for it? Since it sounds like you're keeping seperate finances, how are you splitting up joint expenses like rent, and groceries (1/2 each, proportional)?

True. Wedding is taken care of (her parents). Honeymoon lodging & flights are paid for, meals/entertainment will have to be paid for out of pocket.

We're planning on having one joint account, where bills, rent, living expenses will come from, and each having separate discretionary accounts. For her to get a new pair of shoes, and go out for lunch occasionally, or me to buy a car part, or golf 18 holes. I'm more than willing to live without this for a while until my debt is resolved, as I have for a bit, and know it's what I need to do to secure our future long-term. In terms of what to expect for take home, and expenses, her take home is less than mine ($1967/mo.), and she has a car payment ($190) and student loans($?) to pay as well, but other than that, she has no debt to speak of, and a modest bank balance of $5k or so.

USScouser said:   Once Discover is gone, which could happen as soon as July depending on the wedding/her benevolence, would the best strategy be to go after the ring with everything, to free up the $357 a month and ease my mind with one less payment, or make double/triple payments on the PenFed loan while utilising the full promotional period on the ring? I've read all sorts of varying advice regarding strategies. Some say lowest balance, some say highest interest. My gut says that the extra $357 a month would benefit us more short term, and could slowly build an emergency fund while still making double payments on the PenFed. Not to mention, just one less bill to pay a month.

My math is 19 x 357 = $6783, so I assume you've paid down some, and only have about 12 months remaining (12 x 357 = 4284). Watch out for the gotcha for these 0% deals, since if you miss one of the terms, the ENTIRE past interest at ridiculously high rates could kick in (possibly > $1000 penalty). For this reason, I would either put this on autopay or just pay it off. Max benefit is $20-250 keeping this ($4000 @ 1% vs 12% reduced to $0 over 12 months). This caution may also applies to some of those 0% balance transfers.

USScouser said:   I'm 25, she's 23. I have a 401K w/ about $6k in it so far (only doing 2% payroll deductions til I get this mess sorted). She does not have a 401k yet, she's still on the honeymoon period w/ her first job out of school. Don't worry, we're happy renting until we're in a position where we're ready. Feeling shackled by debt & house poor is not good. My #1 goal is to not let this happen to me/us again.

Do either of you have 401k matching? It's a gimme, but other retirement investment has to be weighed against your highest interest (over 12%?).

How much do you have in student loans? What is your payoff schedule (years)? Have you looked at forbearance?

Allow me to reframe what I understand:

Budget:
Take home pay: $3150
Rent: $1150
Utilities: $285
Long Term Debt: $350

Leaves $1365 for everything else. I see you splitting this $765 towards Short Term Debt and $600 for living expenses.

Short term debt:
Car $5500
Sapphire: $4300
Discover: $2780
Jeweler: $4000

Total Short Term Debt: $16,580

So if you take your $765 to just pay off the principal, it would take you 22 months. During that time, you'll accumulate interest, so you'll need a few more payment to get rid of interest expenses.

So, your overall situation is manageable, and what you're dealing with is balloon payments and ballooing interest. Keep that in mind as you juggle your debts.

Simple math is to take half of any reduction (or increase) in interest difference times the amount and number of years. For example, if you can refinance a 3 year, $5000 car loan from 5% to 2%, you'll save about $225 (0.5 * (5%-2%) * $5000 * 3 years). If you have $1000 at 0% and it jumps to 12%, it will cost you around $600 in a year (0.5 * (12% - 0) * $1000 * 1 year).

What this shows is that the car loan isn't so bad and you can make modest improvement. The real meat of the savings come from 0% credit cards and not paying double digit interest rates. If you can shift over some of that balance to a larger car loan, it's worth doing as well.

Please come back in 6 and 12 months and let us know your progress. You should be under $10,000 short term debt and nearing your midpoint.

Thanks macosx. I updated the balances in my first post, they're marginally different, about $1000 less in short term debt than I originally thought (still a lot though). What would your recommendation be then? Use the PenFed refinancing, and lump the car & Sapphire balance together for a lower payment & interest rate all around, or go with my initial plan 1, and combine all three card balances on a 15 month 0% interest card?

Don't panic, as you're not too depe in the hole yet. it's good that you're working to get out of it.

Step one: Sell the car. Take ~$2000 of the net proceeds to buy a beater. Apply the rest (~$1500) to your debt. Use the freed up cash flow ($220 per month) to throw at the rest of the debt.

USScouser said:   We're planning on having one joint account, where bills, rent, living expenses will come from, and each having separate discretionary accounts. For her to get a new pair of shoes, and go out for lunch occasionally, or me to buy a car part, or golf 18 holes. I'm more than willing to live without this for a while until my debt is resolved, as I have for a bit, and know it's what I need to do to secure our future long-term. In terms of what to expect for take home, and expenses, her take home is less than mine ($1967/mo.), and she has a car payment ($190) and student loans($?) to pay as well, but other than that, she has no debt to speak of, and a modest bank balance of $5k or so.
So it sounds like loan repayments for each of you will be coming from your discretionary accounts? Meaning your plan could be dependent on how you're determining what amount to keep for yourselves. Assuming you each would drop half of the expenses into the joint pool, you probably should be freeing up nearly $700 per month with shared rent and utilities. So you might be able to pay it down in half the time macosx calculated above.

If you can't get good terms to refinance your debt, could you set up some kind of internal 'loan' either from the joint pool or her funds to pay down balances?

Only downside I see is that opening a new Chase CC...I am almost certain would not allow you to transfer a balance from an existing Chase account. Might have to look at a different bank to be able to do a BT on those accounts...but def a good idea. 0% interest and you can pay that debt off in no time. You are not in that bad of shape....really you will have about 23months worth of debt. Most people would love to be in your shoes. Just think you could have this debt or more, and be upside down on a house.

USScouser said:   

Car - $5500 balance, 4.99% - $227 monthly payment


Refi the car loan @ PenFed (Pentagon Federal Credit Union) @ 1.99%

I figure you have 26 months left on your 5500 @ 5.5% so you will pay $347 in interest over that period. If you refi @ keep the term at 26 months your Payment will drop to $216/mo and you will only pay $123 in interest. But that doesn't do much for your cash flow. If you increase the term to 36 months they your payment drops to $157/mo and you have and extra $69/mo to put towards paring down your more expensive CC debt. @ 48 months payment drops to $119/mo and you have $108 to pay to CC and you still pay only 1/2 the interest you are going to pay now @ 5.5%.

My strategy would be to refi the car for as long as possible (see what they will max out as the term) and put all that saved cash flow against my more expensive debt.

I got called back about 2 hrs after I submitted my on-line application and was instantly approved. You have to join the CC and it doesn't matter if there isn't a branch near you.
There may be other Banks/Credit Unions with similar rates.

Good luck.

doranski said:   Only downside I see is that opening a new Chase CC...I am almost certain would not allow you to transfer a balance from an existing Chase account. Might have to look at a different bank to be able to do a BT on those accounts...but def a good idea. 0% interest and you can pay that debt off in no time. You are not in that bad of shape....really you will have about 23months worth of debt. Most people would love to be in your shoes. Just think you could have this debt or more, and be upside down on a house.

this.. you are not going to be able to transfer sapphire to slate.. 100%.. which is unfortunate because that's one of your biggest problems right now.. but all things considered your situation is not that bad

What part of the country do you live in? Utilities for a single person seems high. Do you work from home?

I would try to pay off one of your higher interest Student loans once the CCs are paid off instead of double payments on the car loan ( 1.99% is a cheap loan ).

If you can pay off Sapphire with the car loan and get a new card to put the discover and ring on, that will reduce your monthly minimums and ~$6k for the discover and ring over 15 months is only $400 a month ( which is only slightly more than your currently monthly payment on the ring ).

Skipping 18 Messages...
try lendingclub.com. They'll consolidate your debt



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