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  1. #1
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    Paying Credit Card Off ?

    We recently sold our home. We paid cash for a piece of land to build our retirement home on. We have picked out the house plans and have the builder lined up. We have only one credit card and it has an $18k balance. I am retired and receive SS and a Pension. My wife will be receiving a Pension and will continue to work full time for another 3 years. Is it to our advantage to take some of the $ from the sale of our house to pay off the credit card and use most of the remainder toward the construction loan? Or should we continue to pay on the credit card balance and either apply the $ to the Mortgage or bank it?

  2. Member
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    #2
    Pay off the credit card, plus save some for a rainy day. Then try to never put more on your credit card than you can pay at the end of the month. Credit card debt is the worst debt that you can have in most cases.

  3. Member Bsktball55's Avatar
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    #3
    Yes pay off the credit card. It probably has an almost 20% interest rate, your construction/mortgage isn't going to be anywhere near that kind of rate.

  4. Banned
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    #4
    It's at 9.9%, but totally understand the logic.

  5. Member mysuzytoo's Avatar
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    #5
    The Fed just raised the prime today so pay that credit card off NOW! It's really funny how paying off the card will work though: You'll pay the entire amount on the bill, but then they're going to send you another bill with yet another balance ... just a little more interest you'll owe. Been down this road!

  6. Ranger Boats Moderator 22RangerZ520R's Avatar
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    #6
    Quote Originally Posted by Bassin08 View Post
    Pay off the credit card, plus save some for a rainy day. Then try to never put more on your credit card than you can pay at the end of the month. Credit card debt is the worst debt that you can have in most cases.
    ^^^This^^^


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  7. Banned
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    #7
    I could not imagine sitting down going over house plans knowing I had 18k in credit card debt. I'd be wondering how I got that racked up before building a new home. I'm wired a lil different I guess

  8. Member
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    #8
    Get on the Dave Ramsey train if you're looking to win with money when you possess any kind of debt. Given it sounds like you're on fixed income (retired) and your wife's finances are well known you have the income side of the equation figured out nicely.
    Hopefully you have a budget in place for your monthly expenses so you know where you're money is going every month.
    The fact that you have already sold your house and have liquid cash available I'd eliminate the Credit Card TODAY and kick that consumer debt to the curb and celebrate!
    When analyzing the new construction you took a great first step in purchasing the land in cash (given your debt situation) rather than taking on more debt.
    If you have no other debt (boats, cars, student loans, etc.) other than the credit card you need to have a SOLID look at your income and budget to find out what you can afford to build with the new builder.
    THAT IS if you also have a fully funded emergency account/rainy day fund of 3-6 months of expenses.
    Once you're on Dave's babystep 3B, with that emergency fund in place, you can have a clear picture of assessing a mortgage. You want to have enough cash for 20% down (to avoid PMI) on a 15 year fixed rate loan whereby the new house payment is no more than a 1/4th of your take home pay/income.
    When you put that 20% down to secure the loan then you're officially on babysteps 4, 5, 6. If you don't have kids college to worry about, take out step 5. Any income into the house, 15% to retirement/investments for future living expenses and aggressively paydown the house.
    That's what I would do if I were in your shoes! Thanks for asking the question it was a fun situation to have a think on. Good luck and let us know how it goes Nitro!

  9. Banned
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    #9
    I hate to say it, but $18K in credit card bills is a strong indication that you and/or your wife has a spending problem. Take the proceeds from the house and pay that card off. Then, cut all credit cards up immediately. A little behavioral modification is often required to not fall back in that trap again.

    My wife and I always payoff all credit cards 100% in full. If we don't have the money in the bank to purchase something, it doesn't get bought. I'm just so thankful that our house is paid for, which was a priority for us before retirement as our income is down a little. I'm not necessarily a Dave Ramsey guy, but what was said about mortgages above is probably about right.