And one more - credit card debt

[mrsho]

I have about $18,000 of cc debit, currently no interest. Hoping that I can roll it into another no interest card when the current period ends.

Should I continue to try to pay down a bit at time OR stop 401K investments (which are being matched ) to knock it out in 2 years?

[puppylove64]

Before you even consider reducing 401k, have you completely stopped adding to your credit card debt? Are you living within your budget now and can you cut any other current expenses to help throw at the credit card debt

[waverly]

Dave Ramsey would say yes stop all contributions. Other financial advisors would say don't pass up the free money with the match. I am inclined to go with the second one. puppylove64, has good points.

[mrsho]

Sept 19, 2019 10:44:32 GMT -5 Cappy said:

Questions:
How much longer until you lose your 0% on the current card?
What are you paying /month on the balance now?
Are you contributing the minimum to get the 401k match or more than the minimum?
How many years until retirement?

I've personally paid off a large debt using the 0% strategy and it worked fantastic. But I feel like it can be precarious if any part of the card house falls and you get stuck with a high rate. I'd still do it over taking away from my 401k contributions, unless you are socking in more than your match. In that case I'd consider reducing down to the match and use that to escalate CC payments. I'm a fairly debt-averse person though.

It will be over soon but there are other offers coming in all the time.

I pay about $400 per month now but if I stop the 401K I could pay close to $1100 a month.

I am contributing slightly more than the match atm.

I have 25 more years until retirement.

[mrsho]

Sept 19, 2019 13:18:37 GMT -5 waverly said:

Dave Ramsey would say yes stop all contributions. Other financial advisors would say don't pass up the free money with the match. I am inclined to go with the second one. puppylove64 , has good points.

We are currently single income with 2 small kids. I guess we can be more frugal with groceries, and I can shop less although I don't do much as is.

[oswin]

I would probably reduce contributions to just get the match. Every little bit helps. That said, I highly recommend going through your monthly spending with a fine-tooth comb. DH and I have just switched to budgeting where nearly every dollar is accounted for somewhere and it's been hugely helpful for us. For every single purchase, we have to ask "what budget is this coming from?" and for most of them, we've got budget set up for it, but for others we have to figure out whether it's necessary or not and if there's any money anywhere to pay for it. We're using Simple, which is an actual bank account that lets you easily put money into different "Expenses" that are automatically funded when your paycheck comes in. Whatever is leftover after filling up those Expenses is your "Safe to Spend", which is how much you can spend without taking money away from fixed expenses. It was a pain in the butt to move all of our spending over to a debit card, but now that it's done it's so easy.

[lolalolalola]

Similar to prior posters, I personally wouldn’t give up free matching but would reduce to the match level. I would also make sure you are not adding to the debt.

However you aren’t me! To be frank, if the only way to pay it down without getting hit with a high interest rate is to stop contributing to your 401k then you may not have a choice. Technically, If you’re confident you can get another 0% card, it makes more financial sense to switch from card to card to pay it off over the next 4 years, but that’s assuming you don’t pay any balance transfer fees or add to the debt.

Is there any way you can bring in extra income to help pay it off, like babysitting?

[moolarkey]

When you switch to card from card, are you closing out the card that you have moved the debt from or do you leave that card open?

[covergirl82]

I would tend to agree with others that you reduce your 401k contribution to the minimum amount to receive the match. However, if you are really wanting to knock out the CC debt, you have quite a ways until retirement, so you could stop your 401k contributions now, pay off the CC debt, and then increase your 401k contribution with the amount you had been paying on the CC debt, and do that for a couple years (like a "catch-up contribution" for the years you were not contributing).

[jinkies]

18,000 / 400 = 45 months to pay off. That's assuming that you can consistently pay 400/mo AND that you are able to maintain zero percent interest over the next 4 years.

18,000 / 1100 = 16 months to pay off. (Again assuming that you can consistently pay the 1100). 16 months isn't that long in the scheme of things. I would be worried about the zero interest running out before the 4 years is up. I think I'd be inclined to temporarily stop 401k payments and just knock out the debt in 16 months.

That is assuming that you are not incurring new debt, and that you feel confident that you will be done in 16 months.

[thatgirl2478]

Yep. I hate the idea of stopping 401k contributions, but I would do it to pay off that debt faster. Particularly if you're relying on a 0% card promotion.

That said, you haven't said if you've stopped ADDING to credit card balances.

I would try to pay that 18k off in under 16 months - maybe post your current budget and the MM people can help you find areas you hadn't thought of to cut.

[scout8]

I would continue the contributions up to the match. I don't think it makes any sense to pass up free money to pay off no interest debt. This is assuming you can continue paying no interest on the credit card.

I don't think you've answered if you have stopped adding to the credit card debt. If you are still incurring debt, then you need to focus on your budget first.

[mrsho]

I am not accruing additional debt. It's the 18K and yes I am closing out cards that I am not using.
Thank you all for your advice.

[mich1]

Sept 24, 2019 9:41:59 GMT -5 mrsho said:

I am not accruing additional debt. It's the 18K and yes I am closing out cards that I am not using.
Thank you all for your advice.

If you are concerned about your credit score, do not close out the credit cards....put them away in a drawer and don’t use them.  

Your credit score is part percent utilization, and closing those cards can increase your percent utilization.  This might have an effect on insurance rates and the ilk.

[lust2hart]

Sept 20, 2019 11:22:10 GMT -5 jinkies said:

18,000 / 400 = 45 months to pay off. That's assuming that you can consistently pay 400/mo AND that you are able to maintain zero percent interest over the next 4 years.

18,000 / 1100 = 16 months to pay off. (Again assuming that you can consistently pay the 1100). 16 months isn't that long in the scheme of things. I would be worried about the zero interest running out before the 4 years is up. I think I'd be inclined to temporarily stop 401k payments and just knock out the debt in 16 months.

That is assuming that you are not incurring new debt, and that you feel confident that you will be done in 16 months.

This is what I would do as well. And, if you can put the $1100/month toward your 401k after you pay off your credit card debt, it won't take long to recoup 16 months of missing contributions.