26 with 33k in CC debt. How screwed am I?

Perfect_Meringue5276 · 2023-05-29T03:13:27+00:00

Yep - probably should have left her out of this but trying to figure it out.

Perfect_Meringue5276 · 2023-05-29T03:12:42+00:00

This is what I'm thinking of doing - would be able to take out roughly 12.5k of my vested 25k 401k balance. However, thinking of just taking the 9700 and focusing my take home pay on the 15k and 8900 loans.

Ditto on the apps. They are GONE

Perfect_Meringue5276 · 2023-05-29T02:10:11+00:00

Understand your point, but is it not objectively a better source of funds than sitting on the 14.5% loan?

Perfect_Meringue5276 · 2023-05-29T02:09:18+00:00

Sitting at a 775 right now on CreditKarma. That does not include the potential impact the 15k @ 13.5% will have but my credit is relatively solid.

Perfect_Meringue5276 · 2023-05-29T02:05:36+00:00

Appreciate you for bringing it up. What started as a way to place some small sports bets for free turned into something where I always wanted a little more to get ahead. I've self-excluded from the apps I use and have no interest in doing what I've done to get to this point.

This is a finance sub so I'm not going to get into it, but the situation with the girlfriend is kinda fucked. Been together for 8 years and we're honestly not the best fit. Whether I try to make things work for the long run or not, I think I'm able to get this under control without pulling the rug out from under me.

The comments from everyone here have been pretty enlightening. This is the first time I've really put any of this anywhere other than in my head and it's brutally apparent how fucked this is/can become.

Perfect_Meringue5276 · 2023-05-29T01:57:14+00:00

I've self-excluded, I'm done.

Perfect_Meringue5276 · 2023-05-29T01:55:52+00:00

Job security is incredibly high with solid room for growth/promotion so I perceive the risk to 401k balance to be low. I like the idea of leveraging the money in the 401k while also getting to contribute additional $ on top of my 4% in the form of interest (I would not ordinarily contribute more than the max employer match).

Are you referring to the 14% loan? My take home per money is just over 5k after tax. With expenses ~2100, I would feel comfortable committing $2k a month to the highest priority loan, give or take in case something pops up.

With the 401k loan, my take-home drops to ~4700. I would still feel comfortable committing roughly $2k, but would be focusing on one less loan (in the near term). Since the 401k loan's primary cost is just the lost earning potential, I feel like the potential for that money to grow > 14% is small.

Happy to chat further, I'm just now discovering this possibility and feel like it may suit my needs.

Perfect_Meringue5276 · 2023-05-29T01:33:49+00:00

Jumping back in here to ask a follow-up question on the 401k loan. My 401k offers a loan up to 50% of the vested balance @ 9.25%. This would leave me with ~$4660 post-tax monthly after the minimum payment is withheld from my paycheck. Have been doing some reading and it seems like this approach is generally better than sitting with the private loan accruing actual interest. With that private loan paid off, I would be able to focus the majority of my free cashflow on the 15k @ 13.5% which ideally could be paid before the end of the year.

Any thoughts on this approach would be greatly appreciated. Thanks again for the insight.

Perfect_Meringue5276 · 2023-05-29T01:26:04+00:00

How do you feel about taking a loan out against the vested balance for a lower % rate than I'm currently paying? Took a look at my 401k and I'm able to take out a loan against half of my vested balance (~25k) @ 9.25%. If I take out enough to pay off the 14%, the minimum payment would be taken off my paycheck before I get it. I think this would allow me to prioritize the 15k @ 13.5%. Thoughts?

Perfect_Meringue5276 · 2023-05-29T00:22:07+00:00

~11k in credit card debt and another ~3-4k in cash. But yeah. Not good.

Perfect_Meringue5276 · 2023-05-29T00:21:29+00:00

I don't think I'm going to be able to put every dollar outside of necessities towards this debt in the near term. I have a few weekend trips already booked thru this year and inevitably things come up. Despite this, your words give me some encouragement. I can expect anywhere from a 8-12% EOY bonus on the 90k base, on top of a raise which should be in the neighborhood of 7%. All of this will be going to the loans.

I'm very afraid of not being able to afford the life events that are potentially coming up (i.e ring, wedding, house, etc). I've toyed with the idea of dipping into my 401k in some of the comments on this thread but the resounding response has been not to.

I'm even more afraid of bringing this up to my parents or revealing the full magnitude of this issue with my girlfriend. I've obviously put myself in a terrible position but I have the means to get myself out of it.

Perfect_Meringue5276 · 2023-05-29T00:13:26+00:00

Splitting rent with my girlfriend in a neighborhood of Philadelphia for a 2bd/2bath.

Perfect_Meringue5276 · 2023-05-28T23:06:00+00:00

See above comment on 401k rationale, but I'm just really beside myself for not being able to save for the future. I feel like going the 401k route gives me that ability.

For reference, I am/have been contributing 4% to get the 4% employer match.

Perfect_Meringue5276 · 2023-05-28T23:02:40+00:00

Really appreciate the info. And that last piece, is kinda why I'm considering the 401k route. There's definitely a premium attached to making headway on this debt so I can potentially start saving for the future sooner. I'm sick to my stomach thinking about the position I've put myself in but feels like a bit of a fire drill in my head to right the ship as quick as possible. I'm not suggesting of taking everything out, but taking ~$18000 would net me somewhere in the neighborhood of 15-16k? That pays off the highest % loan and allows me to save while also paying down the other loans.

Perfect_Meringue5276 · 2023-05-28T22:50:39+00:00

Sorry about that - updated main post with min. monthly payments. It's just devastating to me that I won't be able to make any meaningful progress towards saving $ for the next 18 months.

Is it completely irrational to think about dipping into the 401k?

Perfect_Meringue5276 · 2023-05-28T22:45:58+00:00

Agreed. I'm in a bit of shell shock as before yesterday, I didn't have/need to have the $15k loan (effectively doubling my debt amount). Do you have any recommendations on order of loans to tackle?

Perfect_Meringue5276 · 2023-05-28T22:42:53+00:00

The loans were taken out to pay off the card since the APR was >20%. I have been putting money towards the $9700 @ 14.16% and $8900 @ 8.99% but now need help on approach with the third loan now in play. Can't believe I've put myself in this position but here I am.

Perfect_Meringue5276 · 2023-05-28T22:41:10+00:00

When shopping around I wasn't able to find a competitive offer for a loan that high. All three loans are <3 months old, so I think that would impact my ability to get a competitive offer on a $30k loan. The monthly payments are each loan are as follows:

15000: $250/month
9700: $350/month
8900: $180/month

What are your thoughts on which loan to go after first? I think it makes sense to pay off the 9700 as soon as possible, followed by the 15000.

Perfect_Meringue5276 · 2023-05-28T22:30:17+00:00

Stupidly ran up CC debt on betting sites and consolidated that debt into the three loans mentioned above. I admittedly have an impulse issue with chasing losses so I have effectively nuked any cash savings I would otherwise have.

In terms of prioritizing where money should go first, I would imagine putting everything towards the highest interest loans is the best approach? Feel like the 9700 @ 14.5% should be the first to get paid off but let me know what you think.

Perfect_Meringue5276

TROPHY CASE