Financil advisory/question

**Sfla80** · 07-13-2016, 07:26 PM

So looking for insight here, and/or opinions.

Hve a foreclosure under my belt back in about 2009.

Since then been working and got my credit back up to 720s.

Recently had some medical bills, and made payment arrangements with them, but just forgot one payment, (just lost my mind since it wasn't my normal monthly expenditures)

So needless to say an 80$ charge hit me for 40 points on credit. Well, paid it off....and credit is back up over 700s. Not great but been working hard at it.

So here is my question. I have a major credit card, and it has a good size balance to it. (used it for wedding and honeymoon and occasional vaca). My minimum payment is 380ish...and usualy pay 420ish depends on month.

I have savings, but don't want to deplete it to pay off card, as im looking to buy a house in the near future.

So was reading on a credit site, that it might be a good idea to take a personal loan and to pay off credit card with the loan, since most likely the loan will have a considerable lower interest rate.

Sounds like a good idea to me? but honestly have no clue. and looking for a little guidance......

Also if I do go with the personal loan route.....do I get the loan for the full amount to pay card off. or pay 90% of it. Just to show credit that I still make payments on time and showing this.

I have never missed any payments of any kind except for that one medical mishap.

Im pretty bad with money but im trying to be better.

So any assistance or guidance would very much be appreciated.

Thank you

**Igifuno** · 07-13-2016, 08:01 PM

So just so I understand, what is your major goal, to achieve a score that's considered "excellent"? Over 700 up to 750 is considered a "good" score and then 750 to 850 is "excellent", so you do have good credit

Or are you more focused on saving $$ by being able to pay off your card with the lower interest rate, or maybe a little of both?

I think that (someone more knowledgeable on this please correct me if I'm wrong) even if you pay something off, the account closes but as long as it closes favorably it stays on your credit and contributes to your score, so I don't think it makes a difference as to whether or not you pay it in full or leave 10% to make payments on.

Either way, I think, that with a lower amount owed, it will improve your credit score.

Do you use Credit Karma? It's an app that I use that gives pretty good tips on how to improve your credit score and gives offers on credit cards that you'll be approved on based on your credit history and score. I found a pretty helpful and you can also go on there anytime you want and check your score which is pretty cool.

**Sfla80** · 07-13-2016, 08:08 PM

Originally Posted by Igifuno

So just so I understand, what is your major goal, to achieve a score that's considered "excellent"? Over 700 up to 750 is considered a "good" score and then 750 to 850 is "excellent", so you do have good credit

Or are you more focused on saving $$ by being able to pay off your card with the lower interest rate, or maybe a little of both?

I think that (someone more knowledgeable on this please correct me if I'm wrong) even if you pay something off, the account closes but as long as it closes favorably it stays on your credit and contributes to your score, so I don't think it makes a difference as to whether or not you pay it in full or leave 10% to make payments on.

Either way, I think, that with a lower amount owed, it will improve your credit score.

Do you use Credit Karma? It's an app that I use that gives pretty good tips on how to improve your credit score and gives offers on credit cards that you'll be approved on based on your credit history and score. I found a pretty helpful and you can also go on there anytime you want and check your score which is pretty cool.

Goal is both, save money and improve score.

And actually this question is because of a suggestion of credit karma. Lol.

Just got an update today that the medical bills was taken off my credit score and moved back up.

And I'm thinking future. Even just paying an extra 20-40 a month on cc....I will never pay it off. But if I get a lower payment via personal loan. I can still make same amount of payments and pay off sooner then later. If that makes sense.

Also would never close the cc. I heard closing cc actually hurts ur score.

And constantly making payments helps it. Especially on time and more then minimum payment.

I'm just worried, the foreclosure still hurts. Was approved for mortgage a year back by one company but denied by another. Which is weird to me because company that approved me said I could ask for alot more then I was requesting.

**Euroholic** · 07-13-2016, 08:11 PM

Mate the best way to save money is by eliminating debt. Its a bad idea to have money "in the bank" earning bugger all interest and have all these loans or credit cards that you still owe money on at a much higher interest Rate. The bit of money you would earn in interest you will be paying(and even more)in loan/credit card interest. Use your savings to pay off your debt. Then just keep saving like a tight arse. Credit cards are a real bad idea. The banks do not want to bleed you dry all at once. Its about shaking you down slowly over time. So they can bleed you the next month and the next month etc etc. So your 5 grand purchase turns out to be 8-10 grand by the time you pay it off.

**Charlie67** · 07-13-2016, 09:44 PM

Originally Posted by Euroholic

Mate the best way to save money is by eliminating debt. Its a bad idea to have money "in the bank" earning bugger all interest and have all these loans or credit cards that you still owe money on at a much higher interest Rate. ....

He's right.

Your credit score is "good enough" for most things. In your shoes, I'd be focusing on the total COST of the debt I carry, and stop pissing away money on interest. Loans (generally speaking) are cheaper than credit card debt.... Unless you are borrowing from the mob, or one of those crappy payday loan places, both sources are equally bad.....

Pay attention to how much you're paying in interest on the credit card... Add those numbers up for a few months and you'll be stunned. Likely you're not making that kind of money on a savings account.

**Igifuno** · 07-13-2016, 11:00 PM

I think that if you can pay off a balance with a higher interest rate with a loan with a lower interest-rate, save money in the long run, and improve your credit score, then it's a win-win.

Too many credit cards and too much credit card debt, as stated before, is not always a positive thing, but credit can be advantageous with regard to larger ticket items, such as a mortgage, so if that's one of the things in your sites then I don't think your strategy sounds crazy at all.

**GirlyGymRat** · 07-14-2016, 03:56 AM

Originally Posted by Sfla80

Goal is both, save money and improve score. And actually this question is because of a suggestion of credit karma. Lol. Just got an update today that the medical bills was taken off my credit score and moved back up. And I'm thinking future. Even just paying an extra 20-40 a month on cc....I will never pay it off. But if I get a lower payment via personal loan. I can still make same amount of payments and pay off sooner then later. If that makes sense. Also would never close the cc. I heard closing cc actually hurts ur score. And constantly making payments helps it. Especially on time and more then minimum payment. I'm just worried, the foreclosure still hurts. Was approved for mortgage a year back by one company but denied by another. Which is weird to me because company that approved me said I could ask for alot more then I was requesting.

I am not a financial advisor.

Eliminating debt is number one goal.

Building credit is secondary. Your score should not go down by paying off a credit card.

Having a lot of credit cards that aren't active is an issue when apply for a loan. This is my problem. I was advised to close the accounts I do not use. It looks as if I could over extend myself even tho haven't used for years. For example the Sears, Macy jcpenny, target, kohls and every shoe and clothing boutique I ever shopped at once.

Your doing great being fiscally responsible and easing your debt burden. I've heard great things about a class called financial peace by Dave Ramsey.

**krugerr** · 07-14-2016, 04:13 AM

Hi mate, I am a mortgage adviser, and Trainee Financial Adviser, in the UK.
So im unsure exactly how things work over there, but I doubt there is too much difference to the fundamentals.

As mentioned above, first and foremost im going to tackle this from a Mortgage perspective, clearing debt comes before saving. Everytime. In your circumstances I would recommend you do a basic Income/Expenditure format on yourself (I use a spreadsheet for mine!). Secondly write down all of your debt, the monthly cost, and the term (If you know the total cost of the credit, include this), you'll then have something that looks a bit like the below.

*Loan - £8000 - £250/PCM - 18%APR - 4 years
*Credit Card - £3000 - £120/PCM - 20%APR
*Finance1 - £1000 - £50PCM - 0%APR - 1 year
*Finance2 - £500 - £50PCM - 35%APR - 2 years

Now, with the above, I would discount the 0%APR for now as obviously, this is a free debt, theres no cost too it.

The others combine (£9500 - £350PCM). In most cases, you'll be able to reduce to cost of this debt by consolidating it with a single loan or credit card, depending upon the amount outstanding. I'd always suggest looking at consolidating as this is the quickest way to reduce the 'cost' of these debts.
I know for example, that in the UK right now, you can get a loan for £9500 @ 3.2%APR for £210/PCM over 4 years (Assuming a good credit score). This is obviously going to reduce the cost of the debt, but also free up some cash monthly. You've flexibility over here to make over payments, or you could simply reduce the term.

Id recommend you use the Savings you have to clear what you can. Once you've cleared it, you can start saving the money you used to use on monthly repayments.
GGR is right, having credit accounts but not using them does slowly affect your credit. Either close the accounts, or use them to build credit. For example I have a credit card that I use each month for my fuel. I pay it off every month in full. Check over your credit report (UK: Experian) to see whats on there, you may find there is old accounts open, or small amounts of credit outstanding. Are there any negative markers on your accounts? Dispute them where you can, as this will also have made a dent on your score!

Do you guys have any tax efficient saving products? Over here for example we have ISA's which allow for tax free growth, or we get tax relief on pension contributions.

**RaginCajun** · 07-14-2016, 06:06 AM

Listen to Dave Ramsey podcast

**Sfla80** · 07-14-2016, 10:44 AM

Ok thanks guys...

Kruger,

Little confused in a few different ways on your post lol....but I think I got the jist.

As for tax savings. I'm not sure.

What I have is

401k with 100k + in it
A free retirement fund that is given from work with about 10k
I have stocks
And I have a "bonus" of sorts. If you are the best business at the end of the year you are given 9k (for my position) and it is held in stocks. After 4 years u r vested 50% and given that, after the 5th year you vested the other 50%.

So that 9k is up to 13k since it's held in stocks. This year will be my first vested. We have won't this 4 years, and I have about 45k in this.

All this I am not sure if anything is tax savable.

**Sfla80** · 07-14-2016, 10:45 AM

I'm also just thinking backwards and paying lump sum of two smaller cards just to get payment off. And. That way I can still use that extra money towards the bigger card.

Good idea?

**Rwy** · 07-14-2016, 11:35 AM

FYI-I didn't read anyones responses.

I work in finance and with credit. 720 and above qualifies you for the best of everything. Medical bills happen to everyone and usually once you pay it off the paid collection doesnt have much impact on the score. It takes years to get your score up and a few months of mistakes can destroy it. Most people do not have the proper credit cards.

You need to apply for the right credit cards that give you the premium perks and terms. I dont know what the balance is so its hard to say if you should take a personal loan or do a balance transfer. There are plenty of cards you can transfer the balance to at zero % interest for 18 months but you will usually pay a transfer fee of 2-3% but that beats 19.99% interest. When those 18 months are up you can do it again. You must read the terms and conditions though. I know discover (dont know how this is even legal) wont allow a balance on their cards to be transferred to another card.

Some good cards off the top of my head are Visa Fidelity, Chase Spark, Discover Platinum. If the card you apply for doesnt meet your goals then dont take it out. I know Discover is doing personal loans at 9% for 5 years. 20k balance is probably a 450 payment over 5 years

**krugerr** · 07-14-2016, 11:38 AM

Originally Posted by Sfla80

I'm also just thinking backwards and paying lump sum of two smaller cards just to get payment off. And. That way I can still use that extra money towards the bigger card. Good idea?

Guess I over complicated it! Lol.

I've no idea what a 401K is. Sorry!

The above makes sense, but I'd first direct money at the most expensive card/debt.

Sent from my iPhone using App

**Rwy** · 07-14-2016, 11:40 AM

Originally Posted by GirlyGymRat

I am not a financial advisor.

Eliminating debt is number one goal.

Building credit is secondary. Your score should not go down by paying off a credit card.

Having a lot of credit cards that aren't active is an issue when apply for a loan. This is my problem. I was advised to close the accounts I do not use. It looks as if I could over extend myself even tho haven't used for years. For example the Sears, Macy jcpenny, target, kohls and every shoe and clothing boutique I ever shopped at once.

Your doing great being fiscally responsible and easing your debt burden. I've heard great things about a class called financial peace by Dave Ramsey.

Store cards are crap. Get rid of all them and work around 2-3 premium credit cards at most

**Rwy** · 07-14-2016, 11:41 AM

Fidelity Visa needs a 100k in assets so I would start there. What broker do you hold stocks in?

**Sfla80** · 07-14-2016, 01:12 PM

Originally Posted by Rwy

Fidelity Visa needs a 100k in assets so I would start there. What broker do you hold stocks in?

Morgan Stanley.

But for stocks I don't have much yet, just started. I put 30 a week. I get 15% off of the lowest closing of the quarter. I have 1400 in that now. Started way to late.

Again the other 40k is just being held in stocks that I don't actually own. If I were to quit or leave the job for some reason I lose this money.

**Sfla80** · 07-14-2016, 01:14 PM

Originally Posted by krugerr

Guess I over complicated it! Lol.

I've no idea what a 401K is. Sorry!

The above makes sense, but I'd first direct money at the most expensive card/debt.

Sent from my iPhone using App

Lol it good man. I gotcha.

And 401k is a retirement fund. I put 6% of paycheck a week and company matching anywhere up to 100% of my 6%.

**JJ78** · 07-15-2016, 10:00 AM

I work in the credit card/financing world.

Personal loans actually negatively affect your credit score. What is the Limit and Balance on the card? The lower the utilization the better, but @ 45% utilization or more is when you credit starts being dragged down.

My advice would be to get the card paid down below 45% UTI. Then apply fopr a good 0% interest rate card for 12-18 months and do a balance transfer to move the debt over to the new 0% card?

Let me know if you have nay more questions. Been doing this for 10 years now and work for myself.

**JJ78** · 07-15-2016, 10:05 AM

Oh and never apply for any new credit cards if any of you credit card balances are over 45% Utilization. Just a tip.

Also if you are military affiliated in anyway, go after USAA, Navy Fed, or PENFED. They have great Balance Transfer cards. Some will actually send you checks that you can deposit into the bank to use the same as cash at 0% interest rate for 12 months or more.

**Sfla80** · 07-15-2016, 12:52 PM

Originally Posted by JJ78

Oh and never apply for any new credit cards if any of you credit card balances are over 45% Utilization. Just a tip.

Also if you are military affiliated in anyway, go after USAA, Navy Fed, or PENFED. They have great Balance Transfer cards. Some will actually send you checks that you can deposit into the bank to use the same as cash at 0% interest rate for 12 months or more.

PM sent.

Ty sir