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This months Credit Card Statment... Ouch... Any advice?
Posted by: spacescape
Date: February 09, 2010 11:44AM
Well, not really that bad. However, due to my cat getting sick we went from a balance of $300-$500 / month which gets paid off every month to about $2,000. I still have 7.99% interest rate with Chase (and will double / triple check). I'm not comfortable taking $2K from my savings to pay it off in full. We have a large chunk of $$$$ in our sons accounts making less than 1% in interest. Would it be horrible to pay off the credit card with my sons $$$$ and then set up our checking account to transfer $$$$ back to their account(s) with 7.99% interest. Or just $250-$500 / month and after 3-4 months give them both an extra $100. We need to invest their $$$$ but after loosing half of their college funds within 2 months of opening them I opted to cool my heals.

Any advice for someone who had zero balance on their cards for almost 12 months until this month?
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: space-time
Date: February 09, 2010 11:47AM
pay it off, and then pay the same interest to your sons. But make sure you do put it back!
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: Wailer
Date: February 09, 2010 11:48AM
It'd be hard to get an guaranteed 8% after tax return on anything, so I'd pretty much beg, borrow or steal to get that return.

If you have a family member with some cash, offer them 4% or (.25% per month simple interest) and you'll both win.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: mattkime
Date: February 09, 2010 11:49AM
why wouldn't you take money out of the left pocket to pay for the debts of the right pocket?



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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: M A V I C
Date: February 09, 2010 11:55AM
It doesn't seem like you will save enough in interest to make it worth it. Yeah you'd save some, but not much. Less than $50.




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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: davester
Date: February 09, 2010 12:00PM
I agree with mattkime. Never give money to the bank if you can give it to family members instead.



"In science it often happens that scientists say, 'You know that's a really good argument; my position is mistaken,' and then they would actually change their minds and you never hear that old view from them again. They really do it. It doesn't happen as often as it should, because scientists are human and change is sometimes painful. But it happens every day. I cannot recall the last time something like that happened in politics or religion." (1987) -- Carl Sagan
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: jdc
Date: February 09, 2010 12:00PM
$2,000?

POMTLMAO!!!!!!! milk shot out of my nose!





Edited 999 time(s). Last edit at 12:08PM by jdc.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: spacescape
Date: February 09, 2010 12:02PM
Quote
jdc
$2,000?

POMTLMAO!!!!!!! milk shot out of my nose!

Why? Because the average is what? $10Kish?
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: davester
Date: February 09, 2010 12:08PM
I also was going to say something about the amount. My average for each month is more than that and post christmas is much higher. I try to funnel all of my purchases (groceries, gas, you name it) through my credit card so that I can pick up miles.



"In science it often happens that scientists say, 'You know that's a really good argument; my position is mistaken,' and then they would actually change their minds and you never hear that old view from them again. They really do it. It doesn't happen as often as it should, because scientists are human and change is sometimes painful. But it happens every day. I cannot recall the last time something like that happened in politics or religion." (1987) -- Carl Sagan
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: jdc
Date: February 09, 2010 12:10PM
$10K? POMTLMAO!!!!!!! milk shot out of my nose!

sorry, not the average in the jdc household, by a long shot. censored smiley

I agree with the others, you are probably only looking about $50 or less in interest by the time you pay it off...





Edited 999 time(s). Last edit at 12:08PM by jdc.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: spacescape
Date: February 09, 2010 12:18PM
I have $400-$500 / month on my other card that I only use to pay "bills". Unexpected things came up this month and as of late I have less than $200 on this card. Maybe my $2K in credit card debt. isn't overly a problem if I just put them away for a few months and pay them as much as possible.

Or just pay it off again and concentrate on my savings for the next few months.

Bill
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: cowboyxjon
Date: February 09, 2010 12:19PM
I would just leave the balance on the card and not worry about it. I'm like you in the respect that I like to pay the balance every month, but sometimes you can't avoid situations like this. The amount you will pay in interest at 7.99% really won't be too much.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: spacescape
Date: February 09, 2010 12:19PM
jdc... I don't think you have credit cards do you?
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: Wailer
Date: February 09, 2010 12:19PM
Just $50? $50 invested in Apple in Jan 1998 would be $3k today.

Of course, you could have also invested in Enron, Bear Sterns or Lehman.

In all seriousness, the rate is what bothers me not the dollar amount. If you had a 1% rate instead, I'd advise you to never pay it off.

I'd be ecstatic with a 3% after-taxes & inflation. I'd liquidate everything and eat ramen noodles to invest every penny I could if I could get that return guaranteed. Sure everyone needs a liquid safety net, but it sounds like you'd be "borrowing" from your kid's college savings earning 1%. If you lost your job tomorrow, you could always charge the CC again, so I don't see how you'd be any less liquid by paying it off.

You need to look at this as giving yourself an 8% guaranteed tax-free return. Once you stop paying off your CC in full, you are starting a dangerous game. Of course if having this debt makes you spend less on stuff you don't need, then maybe you shouldn't pay it off.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: billb
Date: February 09, 2010 12:26PM
I've had a zero balance for years.

The last two Christmases were paid in full inside of 30 days.
In the past I've split it up over three months (holiday spending)

Borrowing money responsibly is supposed to be good for your credit rating.

I still get 0% checks with one credit card.

Never paid the balance transfer game, though.

I'd leave the kid's account alone - and you need an emergency funds account for these sorts of things.
(easier said than done, I know only too well)


That accruing interest should be an incentive to pay it off.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: AlphaDog
Date: February 09, 2010 12:33PM
I swear I'd don't understand the thinking of people who are OK with giving away $50 if they don't have to. As long as you're responsible about returning the money to the kid's account, this is a no-brainer as far as I'm concerned. billb is right, and you should have an emergency fund of your own to cover these unexpected expenses, but why give money to a bank if you don't have to? A couple of years ago, people might have been able to make a good case for paying the interest, but that day is long gone.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: spacescape
Date: February 09, 2010 12:39PM
Safety net took a crap last year when pay cuts and hours got cut for several month. We are back over 40 hours so we are working on the safety net.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: bazookaman
Date: February 09, 2010 12:43PM
mine is more like a safety rope.



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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: M A V I C
Date: February 09, 2010 12:44PM
Quote
AlphaDog
I swear I'd don't understand the thinking of people who are OK with giving away $50 if they don't have to. As long as you're responsible about returning the money to the kid's account, this is a no-brainer as far as I'm concerned. billb is right, and you should have an emergency fund of your own to cover these unexpected expenses, but why give money to a bank if you don't have to? A couple of years ago, people might have been able to make a good case for paying the interest, but that day is long gone.

Time & effort. The time it takes to make a post, follow it, respond to it, transfer the money, pay the card, set aside the right amount each month... would cost me more in time and effort that it would be to pay the interest.

Someone double check my math here - if it takes him four months to pay off $2k, at 7.99% he'll end up paying $18.50 in interest. The first month he wont pay any, the second $9.25, the third $6.17 and the fourth $3.08.

That's two hours of minimum wage in this state.




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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: jdc
Date: February 09, 2010 12:51PM
Our safety net took a crap 2 years ago -- we passed $2K, then $10K, then $20K, then $30K... and we have never recovered

just bought a new car, not another used XXX that might need new brakes, or tires or whatever in the next year -- since the old one was worth $6000 and needed $4000 in work, money we didnt have -- somehow we have to squeeze that in now...





Edited 999 time(s). Last edit at 12:08PM by jdc.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: Janit
Date: February 09, 2010 12:52PM
If you do decide to borrow from the kids' accounts, be sure to document this carefully. If the kids' accounts are separate for tax purposes, you want to be careful in case the tax man ever comes to snoop.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: M A V I C
Date: February 09, 2010 12:56PM
Quote
Janit
If you do decide to borrow from the kids' accounts, be sure to document this carefully. If the kids' accounts are separate for tax purposes, you want to be careful in case the tax man ever comes to snoop.

Yep. My bookkeeper gets irritated every time I do this sort of thing. I used to shuffle money around to save a few bucks here and there, but with over a dozen accounts, four entities... sometimes there's just not a way to enter it in QuickBooks so some kludgey way of documenting it has to be done.




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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: Paul F.
Date: February 09, 2010 01:01PM
IF it was me.. (and you have to make your own decision, of course, not saying my solution is necessarily right for you....).

Take it out of my savings, pay off the card, and then put the card away until not only I have a balance of ZERO, but my savings is not only put-back, but added to.

Why pay interest on a loan when you can pay it off?
I don't care HOW much the interest is, or isn't, it's still a debt that's accruing MORE debt.
The goal is ZERO debt, not "manageable" debt.

When you have money, you have power over your life.
When you have debt, you're a slave to a lender.



Paul F.
-----
A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
----
Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.

--

--

--
Eureka, CA
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: Seacrest
Date: February 09, 2010 01:47PM
Quote
Paul F.
When you have money, you have power over your life.
When you have debt, you're a slave to a lender.

This.





I am not Ryan Seacrest, and I do not approve this message.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: Diana
Date: February 09, 2010 01:59PM
What Paul said.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: M A V I C
Date: February 09, 2010 03:42PM
Quote
Paul F.
IF it was me.. (and you have to make your own decision, of course, not saying my solution is necessarily right for you....).

Take it out of my savings, pay off the card, and then put the card away until not only I have a balance of ZERO, but my savings is not only put-back, but added to.

Why pay interest on a loan when you can pay it off?
I don't care HOW much the interest is, or isn't, it's still a debt that's accruing MORE debt.
The goal is ZERO debt, not "manageable" debt.

When you have money, you have power over your life.
When you have debt, you're a slave to a lender.

I don't dispute what you say about debt making you a slave to a lender. You still ask "Why pay interest on a loan when you can pay it off?" I'll explain it again.

In this case it looks like the interest will cost $18.50. It would easily cost me $50-100 in time and bookkeeping to deal with this sort of thing. I don't know the OP's situation, so I don't know if it would be the same for them. As another poster pointed out, if it's truly an account for the kids, then it's taxed differently. Shuffling the money back and forth can take up a lot of time and effort trying to figure out exactly how that works.

What you describe, in my situation, would be akin to stepping over a dollar to pick up a penny.




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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: AlphaDog
Date: February 09, 2010 04:05PM
Quote
M A V I C
Quote
Paul F.
IF it was me.. (and you have to make your own decision, of course, not saying my solution is necessarily right for you....).

Take it out of my savings, pay off the card, and then put the card away until not only I have a balance of ZERO, but my savings is not only put-back, but added to.

Why pay interest on a loan when you can pay it off?
I don't care HOW much the interest is, or isn't, it's still a debt that's accruing MORE debt.
The goal is ZERO debt, not "manageable" debt.

When you have money, you have power over your life.
When you have debt, you're a slave to a lender.

I don't dispute what you say about debt making you a slave to a lender. You still ask "Why pay interest on a loan when you can pay it off?" I'll explain it again.

In this case it looks like the interest will cost $18.50. It would easily cost me $50-100 in time and bookkeeping to deal with this sort of thing. I don't know the OP's situation, so I don't know if it would be the same for them. As another poster pointed out, if it's truly an account for the kids, then it's taxed differently. Shuffling the money back and forth can take up a lot of time and effort trying to figure out exactly how that works.

What you describe, in my situation, would be akin to stepping over a dollar to pick up a penny.

However, if you'll notice, this thread wasn't about you.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: Paul F.
Date: February 09, 2010 04:23PM
It's also why I capitalized the "IF" in "IF it was me".

I would also point out that if keeping track of your debts takes that much time, maybe you need to reexamine if being IN debt is a net positive for you or not.
Maybe it is, for you. If so, so be it.



Paul F.
-----
A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
----
Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.

--

--

--
Eureka, CA
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: sunfalcon
Date: February 09, 2010 06:03PM
Take your savings and pay off the credit card. IF you have an emergency and don't have the savings, you can use the card again.

Much better to be out of debt.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: M A V I C
Date: February 09, 2010 06:19PM
Quote
AlphaDog
However, if you'll notice, this thread wasn't about you.

And the reason for the cheap shot is?? I didn't say the thread was about me. You said "I swear I'd don't understand the thinking of people who are OK with giving away $50 if they don't have to." So I explained it.

Quote
Paul F.
It's also why I capitalized the "IF" in "IF it was me".

I read it as though you were only applying that to your initial statement.

Quote

I would also point out that if keeping track of your debts takes that much time, maybe you need to reexamine if being IN debt is a net positive for you or not.
Maybe it is, for you. If so, so be it.

And maybe it is for the OP as well. Since we don't know, it's always good to not make assumptions and explore other possibilities.

Quote
sunfalcon
Take your savings and pay off the credit card. IF you have an emergency and don't have the savings, you can use the card again.

Much better to be out of debt.

The only thing about that, and it's not likely to happen in this case being it's only $2k, is that the creditor may reduce the line of credit, thus leaving no safety net. Over the past year that's been a real big issue that has put a lot of people into tough situations.




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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: space-time
Date: February 09, 2010 06:20PM
milk? do people actually drink milk?
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: Speedy
Date: February 09, 2010 08:55PM
Better your cat than your son or you might have added a couple of zeros to the balance.



Saint Cloud, Minnesota, where the weather is wonderful even when it isn't.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: spacescape
Date: February 09, 2010 08:56PM
Quote
Speedy
Better your cat than your son or you might have added a couple of zeros to the balance.

Agreed.
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Re: This months Credit Card Statment... Ouch... Any advice?
Posted by: Mini 9
Date: February 13, 2010 07:27AM
people drink lots of milk
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