My Quest To Be Like IBJANKY

I'm hesitant to apply for any additional credit..I keep thinking "what if I need a car loan" and my FICO has had pulls..

We've applied for credit once within the past 5 years.So not many pulls and no late payments.This debt was accumulated over 7 yrs utilized because of business expenses.ZERO personal expenditures.I've always been known as a tightwad!
Mortgage $646.00 per month
monthly expenses;
Food $180
Utilities etc $350
No car loans
Savings of $12,000

Our income is VERY unstable..The $12,000 emergency fund could be our only income virtually overnight.I've considered using it but cant risk it.

korncrasy said:   Our income is VERY unstable..The $12,000 emergency fund could be our only income virtually overnight.I've considered using it but cant risk it.
The other perspective is that if you use the savings to pay off the cards, you'll immediately have $1700 per month to rebuild your savings. You may want to consider Transfering that $6k then using savings to pay off the rest. Rebuild the savings over the next 6 months, then pay off the remaining balance.

It'd also be worth calling any issuers you have avialable credit with, to see if they have any BT promos available for your account. Quite often they'll be able to offer you something, but it wont be activated unless you ask. You may be able to convert that 6-month promo into a 12-month promo, and maybe get the fee eliminated or capped.

Thank you for the encouraging words...If I were to apply for a NEW card wouldnt they just issue a low limit card to start?That seems to be my previous experience.Thats why I keep mulling over this old card for which I can BT $6000 for 6 months.

The way I would look at that emergency fund is that it's actually what's being financed. Basically you're paying interest to hold cash you borrowed from your credit card. If you look at it that way, wouldn't it make sense to give it back to the credit card company and stop paying them interest on money you currently have no need for? If the need does arise, you could seek out a BT offer and use the debt then. It's a risk to get rid of the emergency fund, but I'd take it if it meant not paying that high interest rate to sit on the credit card co's cash.

Assuming OP has open credit lines exceeding 12k with relatively similar (or better) interest rates than the 14.9% in debt, it is an absolute no-brainer to use the cash on hand towards the debt. In one year alone, OP is paying $1788 to hold onto that emergency cash. Not worth it when you have the credit backstop in place as well. If you still want to be cautious, say use $6-8k of that cash to pay off part of the card and hold onto the rest as an emergency fund. You will still save about $1000 in interest a year if you do that.

raringvt said:   The way I would look at that emergency fund is that it's actually what's being financed. Basically you're paying interest to hold cash you borrowed from your credit card. If you look at it that way, wouldn't it make sense to give it back to the credit card company and stop paying them interest on money you currently have no need for? If the need does arise, you could seek out a BT offer and use the debt then. It's a risk to get rid of the emergency fund, but I'd take it if it meant not paying that high interest rate to sit on the credit card co's cash.
Things have stabilized recently, but for a while those relying on credit for emergencies were being surprised with reduced credit limits/closed accounts with just the slightest change in their credit profile.

It's tough to count on revokable lines of credit for emergency financing. You need to keep some cash on hand, and be prepared to draw everything at the first hint of needing the money, don't plan to slowly draw it as needed.

But in OP's situation, since he can immediately start throwing $1700 back into savings, paying down the debt could be te best option.

OP - another option is to transfer that $6k, using it to pay off atleast one of your other card entirely. Then call up that card and ask for a BT promo, and transfer other balances to that card. While you probably won't get all 0% rates, you should be able to get the total debt into promo rates within a month.

I understand that it would be most rational to use the "emergency Fund" money to pay down a big chunk of the debt.On other side of the coin ,pertaining to that fund, concerns our income source..It could literally end tonight,tomorrow etc..Our source of income is extremely unconventional.I have no other skills that would allow me to toss $1700+ a month towards the debt..But as I've said the emergency COULD potentially happen overnight...scary by the seat of our pants income..It has paid the bills for 7+ years but has also created this debt...I'd prefer creative suggestions that might not include using the emergency fund although I do understand I'm paying 14.9% to keep the emergency fund intact.Im so thankful for everyones insight,this situation has haunted me for many many sleepless nights!

We have made $350,000 in 7 years with the unstable source of income but used the CC to invest in the business..I had my head in the sand working many hours&paying in less than I should have..NOW is the time to resolve it..

You mentioned that you don't have any car loans. Do you own a car? You should consider getting a loan against the car (1.99% at PenFed) and using that money to pay down the high interest debt.

Can your credit card be your emergency fund?

psychoslowmatic said:   You have the certainty of high interest payments vs. the possibility of needing $$. What if you applied for a 0% on purchases CC, paid down the old card with savings, then used the 0% for the next year while rebuilding the fund? You wouldn't be out the 3% fee.
This strategy yields diminishing returns the closer you get to bare-bones spending. If OP saves as much as possible, then the only spending would be $530 on food/utils and $650 on mortgage (not chargeable). During a year-long promo, that's only equivalent to a $3200 balance transfer. Better than nothing, but paying a 3% fee to save 15% interest on twice as much principle would still be better.

Also, this doesn't have to be an either/or. You could put 6k from savings towards the debt and save the rest. Anything you pay down will save you $.
Agree. OP: you should first decide your risk tolerance (how many months emergency cash you really need), and put the rest towards the balances.

jason745 said:   korncrasy said:   We have made $350,000 in 7 years with the unstable source of income but used the CC to invest in the business..I had my head in the sand working many hours&paying in less than I should have..NOW is the time to resolve it..

So you and your SO are essentially making $12/hr each @ 40 hours.

What is the potential for this mysterious income that could all the sudden stop tomorrow? Would it be better for one of you to get a regular job that you can count on week in and week out?
I knew the "get a regular job" thing would come up LOL...I've always worked for myself.A regular job isnt who I am..Working for myself I've allowed myself summers off here at the Cape,afternoons at the beach&a month off at Xmas!..Otherwise I dont have to leave my house for work..Never have I worked 40 hours...Money&material goods arent so important to me.This summer I will work harder&get this debt resolved.A regular job would only interfere with the life Ive chosen and at a much lower pay rate.

naas said:   psychoslowmatic said:   You have the certainty of high interest payments vs. the possibility of needing $$. What if you applied for a 0% on purchases CC, paid down the old card with savings, then used the 0% for the next year while rebuilding the fund? You wouldn't be out the 3% fee.
This strategy yields diminishing returns the closer you get to bare-bones spending. If OP saves as much as possible, then the only spending would be $530 on food/utils and $650 on mortgage (not chargeable). During a year-long promo, that's only equivalent to a $3200 balance transfer. Better than nothing, but paying a 3% fee to save 15% interest on twice as much principle would still be better.

Also, this doesn't have to be an either/or. You could put 6k from savings towards the debt and save the rest. Anything you pay down will save you $.
Agree. OP: you should first decide your risk tolerance (how many months emergency cash you really need), and put the rest towards the balances.
Naas I appreciate all your input...Truly

OP, you already have an emergency. You're going to pay over $1,000 in interest on the CC debt. That's similar to needing a new transmission, right? Use your "emergency fund" to take care of this emergency. Either way, good job getting it down from 22k to 16k in 3 months. You should then have it paid off within about 8 months paying 14.9% or not.

korncrasy said:   Racking up $22k in CC debt I've allowed myself summers off here at the Cape,afternoons at the beach&a month off at Xmas!

korncrasy said:   I've been reading here for a couple years..I've read&re-read the IBJanky thread to stay inspired.I'm hoping for some sound advice because I feel "stuck".I need to make a decision.We had $22,000 in CC debt.Within 3 months Ive gotten it down to $16,000 at 14.9%.We're living tight,I've even stopped buying plastic wrap,just Tupperware now!Our income is not consistant but have been managing $1700+ per month to the CC debt..my question;I have a 0% BT offer on an old card.The period is for 6 months,I can transfer $6,000 with a 3% BT fee...Im just nervous after the 6 months the APR is 17.9...Saving $80ish a month now in interest could cost me in 6 months.Your input would be very much appreciated!!

I would transfer the $6k to the 0%, pay the BT fee, and make minimum payments on the 0% card for the first 6 months. Assuming 2% min payment on the 0% card, your next 6 months would look something like this:

Start	         Rate	  Payment	       Interest	End		        Start  	               Rate     Payment	End
$10,000.00       14.9%	$1,580.00	       $124.17	$8,544.17		$6,000.00	       0.00%	$120	$5,880
$8,544.17	 14.9%	$1,582.00	       $106.09	$7,068.26		$5,880.00	       0.00%	$118	$5,762
$7,068.26	 14.9%	$1,584.00	       $87.76	$5,572.02		$5,762.00	       0.00%	$116	$5,646
$5,572.02        14.9%	$1,587.00	       $69.19	$4,054.21		$5,646.00	       0.00%	$113	$5,533
$4,054.21        14.9%	$1,589.00	       $50.34	$2,515.55		$5,533.00	       0.00%	$111	$5,422
$2,515.55        14.9%	$1,591.00	       $31.23	$955.78		        $5,422.00	       0.00%	$109	$5,313

You'll still owe $6,268.78 and will have paid $468.78 in interest plus the $180 BT fee. Then just take half your emergency fund and pay it off. Or as Glitch said, you can probably get it all to low/0% rates now. Or as everyone said, just pay it off now. Perhaps do a little of everything, and pay it off based on this schedule, but put an extra $1,000 from your EF each month to the 14.9% card. You'll save about $150 in interest and not have the lump sum to make at the end. You'd pay off the 14.9% card in the 4th month, and then put $2,700/mo to the 0% card.

korncrasy said:   I knew the "get a regular job" thing would come up LOL...I've always worked for myself.A regular job isnt who I am..By running up credit card debt I've allowed myself summers off here at the Cape,afternoons at the beach&a month off at Xmas!..Otherwise I dont have to leave my house for work..Never have I worked 40 hours...Money&material goods arent so important to me.This summer I will work harder&get this debt resolved.A regular job would only interfere with the life Ive chosen and at a much lower pay rate.

Fixed that for you. Seriously, you need to change your mindset regarding this debt. It's good that you're paying it off aggressively, but unless your attitude about a debt/life balance changes you will repeat this mistake.

Dang it, didn't read far enough to see that someone already beat me to this...

Here to cheer on OP and give own .02

Took first job mid 2011 after graduating with 135k in student loans and 23k in CC debt.

In the past year I have knocked out the following:

23k CC debt
10k for 2 years of ROTH IRA contributions
9k in 401k + employer match
10k cash for emergency savings

Got a full head of steam now, and plan to cap emergency fund at 20k and then spend next 4-5 years or so paying the 135k of student loans. Am spending about 60% of post tax income on debt maintenance... it sucks but will be worth it when Im free of this all.

Thx to this forum for the good advice and keeping us debtors motivated.