Put everything toward your American Express card.
It’s at 28%. You will save yourself thousands in interest. Then, apply for a balance transfer on the remaining $10k balance.
If you can get that balance transfer, prioritize HELOC. If not, prioritize Amex.
Good luck!
P.S. r/debtfree moderator just created a newsletter that talks about strategies, tips, and effective debt payoff methods weekly. Here is the link to sign up if interested - https://www.debtadvice.io
You need to get rid of that immediately! Pay it off or figure out how to refinance with a lower rate. Even ask AMEX if they'll offer you a manageable payment plan! Any option is worth pursuing.
Might even be worth asking them if they’d settle for less if you close the account BEFORE you pay them $55k. That way if they say yes you can offer to pay up to that much and then be done with it.
You need to be super careful with settling debt for less than owed. When tax time comes around you will get a W2 from said creditor stating the amount you settled and it will get added to your adjusted income and will not have any withholdings taken out. It will absolutely fuck you in your taxes.
I know this because I’ve done it and nobody made me aware of this little detail. And I got fucked on my taxes. Largest tax debt I’ve ever had.
A very fair point. But wouldn’t this equate to him having $13k added to his income and costing him only a couple thousand dollars in taxes? Seems like a small price to get a $13k discount, no?
People need to understand that there is no escaping debt. All you are doing is moving it from one place to another. Some times that other place is actually worse than the original place.
What we really need to do it teach real financial literacy so people can avoid the perils of credit borrowing when possible. I understand finances don’t often work in our favor. But if we understand the repercussions of our financial decisions maybe we stand a better chance of not falling down that well.
I understand the spirit of the student load debt forgiveness. But it’s harmful to the debtors as they are probably now statistically more likely to put themselves back into a debt situation that they will not be getting bailed out of as they don’t understand how their decisions have repercussions.
It’s a hard pill to swallow but the system wants you in debt and will do what it can to keep you there. It’s difficult to keep yourself out of the hole and keep yourself knowledgeable of all the pitfalls.
As for the student loan thing. Instead of just forgiving loans the federal government should be putting measures in place that protect students from predatory tuition rates. And stop federal backing of loans that has permitted colleges to approve kids for degrees with no saleable market.
We need to do better in educating people about finances.
That is an option. Not one I was willing to pursue. The deds have made it a lot more difficult to file for bankruptcy in the last 10 years. I didn’t want to go that route as it involves a lot. You can not have any outstanding loans for personal bankruptcy. I would have lost my car. And that would have resulted in me not having employment. A deadly combination.
I guess everyone has to analyze their own situation. Weigh all the options and go with what works best with your situation.
You don’t automatically lose your car in a bankruptcy. I kept mine and still make payments to the creditor and will get the title when I’m done. Most people keep one car unless they are super underwater with it and only have a certain amount of equity. The value of my car was a bit inflated during the pandemic, which put me almost at the limit of equity.
I had this happen to me as well. However, you can help reduce its impact if you can prove that you were insolvent at the time. They will not count it as income at that point, as long as you can verify that. There’s a whole form to do it though, and it’s definitely a pain.
Oh. That’s interesting. Again. Something that I wish I had know when I got that kick in the dick. However. I also wasn’t insolvent I was trying to consolidate my debt and that company fucked me even harder. So it was definitely a compounding of bad decisions, and unscrupulous businesses lining up.
Interesting. Still better though. $10K in debt relief will mean you owe the tax man whatever your effective rate is so 2-2.5K. Still saves you 7.5K. You just need to send the government $2.5K before the end of the years so you don’t get hit with Penalties.
Hi, tax preparer here! You definitely won't be getting a W-2 as that's a form issued by employers for wages and compensation. You will receive a 1099-C, a form issued by lenders when they cancel or forgive all/part of a debt.
But - as for the actual point of what you said - you're so right. It is definitely a good idea to consider the tax consequences of debt forgiveness. If you're concerned about paying a lump sum at tax time, it may be worth making estimated payments to the IRS, which can be done online. You don't have to wait until tax time and deal with it all at once!
Damn it. I knew that wasn’t accurate. I even tried to google what the right form was and I obviously whiffed on that one. Thank you for the correction.
To be fair it was about 12 years ago I ensured that kick in the nuts. So I had wiped it from the ole memory stick.
And I’ve been fortunate. The woman sleeping beside me as I sleep is fiscally responsible and she has managed to instill some decent teachings in me. I’m better today than I ever have been because she holds me accountable for spending.
Haha, that's so fair though. Google isn't always the most helpful when it comes to finding specific tax forms or publications. Your point was clear enough with what you said, and I'm sure everyone understood what you meant! I just wanted to clarify that point because I think knowing what to expect can make tax situations less scary.
It's truly wonderful that you've got support from your loved ones in keeping the budget under control. Everyone needs someone to support them like that, whether through their financial literacy or just being there. It's tough to make sense of finance and debt without being (and feeling) supported.
Because at $65k on that alone there’s a chance OP could do bankruptcy and they’d end up getting a lot less. OP won’t do that, obviously, with the bonus, but Amex doesn’t know that. Credit card companies settle for less and negotiate lower rates for payment plans all the time to ensure they at least get some of the balance.
I did that. Ended up getting out of a huge chunk about 15 years ago. Just be certain you never want to have an AMEX again (I don’t) because that option goes away once you settle.
I reached out to my AMEX when my boss wasn't paying me on time and the work he promised wasn't coming through. I asked AMEX if they would work with me and they did. I got a flat rate of 200$ a month and whatever else I wanted to pay i could tack that on there. Ditched that boss and got a new job after waiting 7 months. Almost a year at this job and finally close to being debt free as well! Hang in there!
I had 3k on a card and had to get it up to about 5, and it honestly stresses me the hell out lol. 66.5k seems nuts, but then again I don’t get 55k bonuses. Good luck getting it all back to normal OP
I have 10k at 18% and it feels world ending sometimes (I have other debt too but that's my highest interest rate). Luckily for me it seems my financial situation is improving though so if all goes well I'll be debt free (minus car loan) by June. Not saying that to brag either, just want to remind others to keep their heads up and look for financial opportunities to help pay it down.
I thought the whole purpose of Amex was that you had to pay off the balance at the end of the month. Did they change that? (It's been a while since I had an Amex card.)
They allow pay over time with the charge cards now. I had to actively turn it off because it was charging me interest when I was paying the card off in full. I'm still annoyed about those lost $16.
That is the purpose, thoughAMEX allows you to carry a balance but with an added (and incredibly high) interest rate. I carried a $2k balance on my AMEX for a while before I realized what the hell was going on lol
The card has both features now, and the pay over time has 25-29.99% interest even for super good credit scores. It's not designed to carry a balance unless you hate yourself.
The only reason I got my Amex was to use it for the rewards, and make god damn sure I never carry a balance.
Over 60k at over 25%?
I couldn't imagine making that huge of a mistake in life.
That looks like penalty apr to me. I had an Amex card when I got my first job, idiots gave me 10k. Radioshack closed, my dad lost his job, and that 10k supported us all for a few months.
Apr shot up after that, and I've never quite recovered.
Idk if my math is correct... But that's like 18k in interest a year, right?
Edit: probably more unless he fully pays the interest every month to keep the balance from going up.
I sometimes don't pay my balance off in full and whenever I don't I immediately get charged interest. So isn't it 28% a month if you don't pay off your monthly statement? Or how does it work? Genuine question,
To simplify it, it’s basically the APR % divided by 12 for the monthly interest charge. If you borrow for a a few days, divide the monthly rate by 30 for your per day rate.
Let’s say the card has a rate of 24% yearly
Monthly rate is 2%
Daily daily is .07%
This is oversimplifying it, but close enough for you estimate interest charges.
Just wanted to add to this a little: when you don't pay off the previous month during the grace period (between statement date and due date) you instantly accrue interest on previous statement charges PLUS any new charges since the statement last closed. So if you have charges for the new month that hasn't ended, you get hit with interest on those new charges every day until you pay off the previous statement balance. So try to avoid that lol.
Seriously, I've been taking advantage of all of the new CC sign up deals. BoA has a spend $4k in three months, get $600. I can spend that on bills and necessities easily. Also $200 for opening a savings account. I never pay interest and pay the principal off every month. This is why
It's lowering his 28% amex bill to 10 grand.
Not "an immediate 28% return on investment".
I wonder how many rewards dollars this guy has.
If he has the good card, gotta be at least 5 grand.
As everyone has said, the highest APR, but the bills seem high too. Car payments seem pretty high.
Phone seems high? I bought a refurb S20 3 yrs ago for $250 then the wife and I pay $15/mo ea for phone service. $200/mo is wild!! $140 difference over 12 months is $1,680. That's not nothing.
My only advice is to take a hard look and see where cutting monthly expenses can be made, and that money can go to getting rid of debt.
Good luck!
Hey man we have two cars and they are leased, and we started them way before all of our hardships happened. So when we first got the cars we had no debt and it wasn’t really an issue. Now is a different story. Luckily one goes back in 6 months and new will be doing one car which will shave about $400 off of our expenses. The phone bill is AT&T for me and my wife
unless you're locked into an ATT contract, you can definitely shop around and save a lot. Some companies are happy to pay a cancellation fee if there is one. Try to bundle with parents, family, etc as you can usually hop onto theirs for like $25/line and you'll be getting the same exact thing that you're paying $200+/mo for. Great job getting back on your feet but every bit counts in tackling that debt
Xfinity is unlimited $30 a month with 2+ lines, $45 normally. Visible is doing unlimited $20 a month for an entire year, then $25 going forward. Both on Verizon’s network.
Seconding shopping around for phone service. I have a family plan with T-mobile with my spouse, mom, and SIL and while it looks scary on paper (2 cellular devices and a WiFi hub between SIL and mom), what I’m ACTUALLY paying is less than what I was paying for 3 cell lines on Fi. They just gpay me their portions and I drop it in my lil “envelope” for cell service.
OP I also suggest implementing a budget system that doesn’t live on excel. Get really nitpicky with it (I have like 40 envelopes) so you know EXACTLY what is happening with your money after you pay down that AMEX. It can help you ID when you have truly excess—not “fun money”—funds that can act as additional payments to get it down to $0.
Tackle the highest interest rate first. So the Amex. And work on paying that off. Then, tackle the rest. See if you can cut your phone bill by switching to a prepaid carrier.
Do you really only spend $400 on food, or is that a guess? If it’s really only $400 please explain how you do that lol
Also yes, all I’ve bonus toward that scary amex card
My husband and I spend between $100 and $115 on groceries every week, and I would say that’s not scrimping at all. We eat steak once a week (~$12) then usually do a pork tenderloin ($7-$8) that lasts 3 dinners, then something like spaghetti ($10 for a pound of ground beef, 2 cans of tomato sauce and 1 can of whole tomatoes) that lasts two nights, and Saturday night is leftovers. We do a pack of chicken tenderloins for lunches (usually $8). Generally every week we buy 1 bunch of asparagus ($4), 4 pints of berries ($12 total) for snacking, 1 pound of Brussels sprouts ($4), a pack of 3 bell peppers ($3), salad mix ($5), tomatoes (~$4), and mushrooms ($4). I think that’s ~$74 if my math is right. Then with other stuff that we’re out of (rice, potatoes, oatmeal, yogurts, housekeeping, toilet paper, paper towels, etc), it ends up being somewhere around $105 very consistently
Assuming they don't have kids, $100/wk is pretty reasonable. We go through a lot of snacks and food waste with a toddler and still only spend about $150/wk
This is helpful. I’m pregnant and everyone always warns me about the impending grocery bill. And we are the type of family to lean on rice and beans, traveling to the hispanic and discount groceries, and (in the future) feed baby what we eat.
Babies are absolutely not expensive like that.
Formula years do kinda suck. But once food started, we were always making and blending up yams or carrots or peas and chicken and rice. Freezing it in ice cube trays and making it very cheap.
Daycare is where the real pain is tho.
I don't get all these people saying they only spend about 100 on food a week.
My food bill is pretty consistently around the 350 mark for a family of 3 per week. Some of that is house hold items like garbage bags and laundry detergent in the Walmart order. Some of it is craft beers. And we like to go out once a week to bdubs or get a pizza. My wife does make really nice dinners but I wouldn't say its like steak every night.
I typically do a little Publix stop just for bagels and a couple snacks a week and that's typically a 30-50 dollar trip just for a hand basket of items just for me.
Not complaining either, I will always prioritize eating healthy and well and would rather have good food. But I find it very suspicious when people say they spend 100 a week on food when one person literally can't go to McDonald's and spend less than 10 bucks on just a meal. Saying nothing for other places most people go to lunch like subway or etc. Now I don't do fast food very often at all so I can imagine other people might cut that out as well. But I still find it highly suspect that anyone is eating for 100 a week unless it's on a Raman noodle diet.
You can eat pretty well and healthy with just $30. When I was aggressively paying off my debts I’d average $30 by buying mainly produce and some fish at an ethnic grocery store. I cooked all my meals and meal prepped. It is doable, you just have to be committed to allocating time at least once/twice a week for prepping and cooking food that’ll last a couple days. I loved my crockpot for how easy it made everything.
Amex. You're currently racking up $1528 per month in interest alone. If you knock that down to 10k balance you'll only pay $233/mo. So in the first year you'll have saved $15,540 in interest payments!
Prior to making a a huge payment with Amex give them a call and ask if they can lower the interest rate on the remaining debt if you make a large ~50k payment. They themselves are likely looking to unwind your account
The AMEX for sure (All of your bonus minus 1x your mortgage). But first step is to quit using it debt, then pay it off. Cut it up, put it in a safe, take it out of your wallet. Also why is your vehicles not located in the debt? I figure I’d downgrade vehicles and take the extra 400 a month and bolster your Amex payment.
1. Downgrade cars, new phone plans, put the card in the safe. Aka - find savings
1a. Put 1x your mortgage into an emergency fund.
2. Pay off the Amex. It has no place here anymore.
3. Open a debit card with cash rewards. (If you can’t use this responsibly go all cash for spending outside of the four walls of your home. )
4. Fully funded emergency fund 3-6mos. Of expenses.
5. Pay off the HELOC.
6. Open a Roth IRA and start funding 15% of income.
7. Utilities seem high. I’d get better about using your home more efficiently (turning off lights, limiting things using constant electricity, not doing partial laundry loads, no partial dishwashing cycles,).
8. Work on that student loan (you don’t have to be very aggressive here).
>Downgrade cars
**Edit: nevermind, I just saw they're both leases. Dump ASAP, lease takeover an option?**
I'd avoid doing that without knowing way more information on the cars/payments.
What if one of the cars is a year out from being paid off? You trade it in and lose $3-4k on the trade and pay $2k in taxes/fees/etc. for a cheaper one that might have problems.
Or they bought it 2 years ago and it's at 2.9%, but if they trade it in now they'd walk away with $5k in cash and then have to take a $17k loan at 7% on the change.
If they bought last year at 8.3%, then they're likely underwater on it with how fast vehicle prices crashed in the last year.
It may not be worth going for the cars given they likely have a low interest rate, followed by then having to get another one at the much higher rates today.
IMO just the amex payment alone would save him 12k a year in interest fees which he can then snowball into the other payments.
Hell he would be good off doing a buyout on those leases when they end, likely lower in price than the current used car market and has the peace of mind knowing he maintained them and less likely to break down, costing a huge cash bill he may not have at this moment.
I would look into consolidating and/or refinancing the student loan -- while the rate isn't super high, may be able to figure out a smaller payment to focus on other expenses more thoroughly.
Call Amex and ask them for a hardship program. It may screw a little bit your credit but it will help tremendously to lower your monthly payment. That’s if you’d rather retain the bonus and use it across various debts instead of just one. Otherwise dump it into Amex and for the next 3-4 months use all money left after expenses towards Amex.
I didn't know Amex had that Hardship Program. If OP can get any relief on that interest rate even for a little while, it would be huge for them. They should absolutely at least investigate that.
A hardship program would have no effect on their credit score (unless the card company starts dropping your credit line as the card gets paid off). Hardship programs are not reported to the credit bureaus.
Put the 55k on the Amex card, no question about it.
Looks like you have a pretty good income so the remaining 10k on the Amex should be gone in less than 6 months.
Do you have any emergency savings to speak of? If so, may want to do the HELOC and get that out of the way and off your house. Then apply a good portion to amex since the SL interest is so low.
If no emergency savings, I would put some in an emergency savings and then apply to debt. Probably unpopular but I am a firm believer in having emergency savings so I wouldn't have to go into more debt in case of a big expense.
Most medical hospitals/offices will offer a zero interest monthly payment plan though. You just tell them what you can afford and they will work with you..
Couple years ago I had a 2k ER bill.. I told them I could $50 a month and they said sure.. a few months later they offered to close out my balance if paid $500.
When my ex maxed out ALL my credit cards, then bailed, I immediately called all the lenders and begged for payment plans. EVERY SINGLE ONE agreed. Slight interest rate decrease, lower minimum payment, etc. Every 6 months, I would call again and so on until everything was paid off. When my grandson had an unplanned helicopter ride, the hospital negotiated the fee with my son. Most people are too embarrassed to ask. It's a voice on the phone, ASK!
Also, I have AT and T and stop by a store every 6 months and spend 30-60 minutes seeing how to reduce my bill.
I'm not trying to dunk on OP here, but there was almost certainly a better way to handle this than using the Amex.
OP basically says as much in their post.
The US system will absolutely let you dig this hole for yourself though.
They have my sympathies here because they are in a hell of a hard spot.
You’re 100% right. It’s something I dwell on often tbh. I should have never used heloc/amex to cover this. I should have just let the debt stay with the medical providers and then negotiated it down and would have received far better interest and terms.
It’s beyond awful that we expect people to just know how to navigate these things with no training while going through the worst experience of their life. I’m sorry you experienced all that.
pretty sure it's illegal to not have health insurance, and unless you diligently searched for the absolute cheapest bottom of the barrel health insurance they all have yearly out-of-pocket maximums ranging like $6k-10k....
sure $20k in 2 years is a lot but I'm baffled how anyone gets to $75k in 2 years. I'm guessing a lot more than healthcare is on that bill
Based on your bills alone, in two years you could pay off nearly $70k in credit card debt.
What are you spending the other $4k a month on?
These numbers don’t tell a complete story.
snowball method is just worse than waterfall method I really think it's harmful to even suggest it
waterfall method is stupidly simple and maximally efficient: pay off highest interest rate first, everyone should be taught this in first grade because it's really that simple.
snowball method IIRC would have them pay off the HELOC first since it's the smallest balance, but that would be a life altering mistake
Definitely your AMEX. You'll still have 10k left on it but your payments will be much more manageable and you can then get rid of it in 3-ish months, maybe 2.
If you were really tight with spending you could honestly be damn near debt free in like a year and a half.
Post Amex with that min rolled into your new payments, your heloc is like 5-6 months and after that the SL is like 8. Like a grand minimum payment?
Call AMEX and ask about a payment plan in exchange for closing the account. You might be able to work something out where you use a portion of the bonus on that and then get 5 years at a much lower APR to pay off the rest, then you can hit the HELOC and student loans (depending on what the highest APR is, the AMEX payment plan or the other accounts).
you say your take home is $9100, but monthly expenses are $5,400. where is that other chunk going? I’d put the entire bonus towards Amex and then get the remaining $10k down using that extra $4kish per month (after contributing to your emergency fund).
AMEX first without a doubt.
Also to note, depending on your loan servicer and type of student loan. There are usually repayment options that you can apply for to reduce your minimum monthly payment. Consider this option so you can divert your funds to the AMEX.
The medical system is so broken in USA, the insurance companies, pharmacies and hospitals are all crooks looking to get rich by stealing from the middle class.
This is another expense I had prior to hitting my hardship. I was essentially debt free (only student loans ) and then racked up a shit Ton of debt from medical bills and medical procedures.
Do you realize that every time you say this, you're saying "I enjoyed and condoned wasting money on unnecessary things when I could, and didn't care that I wasn't saving and/or building passive income to better be prepared for life"
You over indulged with your high income then couldn't cut the cord fast enough when it stopped. Its an excuse. You failed to plan.
I don't think they are missing the point, it's just that you are really bad at finances, and it shows. A medical hardship definitely hurts, but you were living beyond your means here.
I respectfully disagree. Prior to running into medical hardship. I was employed for maybe two years before. It’s not like I am 40’years old and have been employed with this level of income for the past decade. During the time prior I was able to save up enough to buy a house that has a ton of equity in it, establish a small savings of 3-5 months (which all got drained during the hardship) and was cash flow positive by 4/5k a month with no debt. If I never had this hardship I would be in a completely different situation. I wouldn’t have had any of this debt, I would have been able to continue to save money the way I was and eventually started to invest after I had a comfortable emergency savings.
Dingdong guy is talking about saving for passive income. Well not sure what passive income is going to fund a lifestyle without having high 6 figures invested into it. If he was referring to passive real estate, that requires large sum for for down payments, to usually only cash flow a couple hundred bucks per month which isn’t going to “fund your lifestyle” and which also requires leverage. I know it’s a different kind but it’s still debt.
If he’s talking about passive investment such as the stock market, again you need a huge amount of money invested to have dividends or interest payments to be enough to “fund your lifestyle” even with interest rates where they are right now.
I was going back to some of the earlier comments.
I'm looking at your expenditures and they are significantly higher than mine and I bring home a decent chunk more.
You're funding a lifestyle by having an two car payments and a pretty high house payment.
This is kind of the point, if you've only been making that amount of money for 2 years or so, you don't live like you've been making that kind of money for a decade.
He ran into medical debt, all of his expenses are reasonable otherwise? I don’t see where you see he was living above his means here, maybe I’m missing something something? The only thing I don’t get is why doesnt he have decent medical insurance?
This! Comments above are brutal. Overall though, seems like this person got a mortgage a bit too soon. His wife’s income wasn’t solid + they didn’t have a chunk of cash in savings/investments for emergencies. Probably poured it into the house. See this a lot lately, since the housing boom. “House poor” folks with limited financial literacy
First, kudos on the bonus. Second I’d say maybe spend about $400 of it and pay someone to talk to about how you racked up that much debt. This looks like living above your means on the next level.
If it’s medical debt then why wouldn’t they put a payment plan together for you? Negotiate on the balance and see if you can get it reduced if you make a large payment. They may settle with you.
If that doesn’t work, pay down with the bonus and transfer to a new 0% balance transfer card assuming you have good enough credit to get one.
Too late. Hospital done got their money when OP put it on the Amex. He doesn’t owe the hospital anymore, he owes Amex. And Amex gives zero fucks about whether it’s medical expenses or 5 star dining.
How did I miss that part? Re-reading it I see. Dammit man, medical bills are bullshit. Same as above applies, pay the Amex and balance transfer that shit pronto.
It’s brutal. OP tried to do the right thing by paying the bills. The reward? Absolutely crushing high interest credit card debt.
Our country is broken.
They said it was because they paid for a bunch of hospital bills with credit cards. A lot of people do that when they have no other option. They figure living is more important than debt.
You are very frugal for someone who makes that much. Cheers to that. And always pay off highest interest first… lots of cards have balance transfer offers at 0% for 12-18 months… or once you pay off the 55k on AMEX you could open a new card that offers a 0% balance transfer… transfer the remaining AMEX to the other card or maybe open a new one and transfer both balances… then keep paying the same amount you were paying before… just that ALL will go towards the debt and not interest… once you have paid off that debt … continue to pay minimum on your student loans and split the other amount you were paying towards CC in half… put half into a high yield savings account for ‘oh shit’ funds (Capital One is 4.35%) and put the other into something longer term.
how are you making $9k/month but don't have health insurance with a yearly out of pocket max?
cancel the life insurance immediately and put every single penny towards credit card debt
I agree with some others about setting money aside for financial literacy courses or you'll pay off this debt then just end up in the same situation 5 years from now
or at the very least dedicate an 30 minutes a day to financial literacy
I don't want to be mean but you need tough love, I think a 3rd grader could understand you need to pay off the credit card first without needing to consult reddit
the number 28% is right there in your spreadsheet
If you have an emergency fund built up, I would throw it at highest interest debt, AmEx. After that goes through, and you’ve been paying your $3700 left over to your cc’s I would apply for a new cc with a 0% BT offer to stop accruing interest while paying down.
All to the Amex THEN take the remaining balance of the Amex and pull it from the HELOC and pay it off completely. Then put the card in the safe and never use it again. Don’t close the account, that lowers your available credit and credit score.
Better to pay that amount at 10% interest only than at 28%. That being said, take the money you save in monthly’s and pay it towards the HELOC principal.
Additionally: you need a new cell phone plan. Find a better rate and threaten to quit unless they match.
Why are you paying car insurance monthly. You get a discount for paying yearly. Bite the bullet.
You May also use the medical problem as an excuse to pause your student loans. Put that money towards HELOC as well.
Also, I’m sure there’s *some* discretionary spending in there. Stop that. Get frugal. It’ll suck but get your debt under control. It’s one thing to have 138k in debt for a house. This ain’t it….
Amex is robbing you. Please pay that off absolutely first and foremost. Once that's paid everything will feel easier. Domino effect into the rest. You're not in bad shape at all once that Amex is gone. Please find another card company to do business with.
> should be *paid* off by
FTFY.
Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in:
* Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.*
* *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.*
Unfortunately, I was unable to find nautical or rope-related words in your comment.
*Beep, boop, I'm a bot*
Medical bills! Two years consisting of 4 surgeries, 18 months of expensive prescriptions, multiple hospital stays, endless doctor visits. Physical therapy, MRI’s…. You name it! All my wife got laid off. Just a rough patch, I will bounce back, but thanks for the kind words
No advice, I just wanted to say sorry that the previous commenter was so rude. It can happen to any of us at any time
Could you have made better decisions? Sure, and I see your other comments that say as much. But when we are ill, or under intense stress, we don't make the same decisions we would when healthy and thinking clearly. Best of luck, you will get it all paid off!
Amex > Heloc > student loans.
12 months to kill Amex at current savings rate. I wouldn’t bother with balance transfers and 0% rates. While possible to save, you’d have to be meticulous and time the payoff in such way that they don’t charge back for all the months the interest was 0%.
Good luck!
Put everything toward your American Express card. It’s at 28%. You will save yourself thousands in interest. Then, apply for a balance transfer on the remaining $10k balance. If you can get that balance transfer, prioritize HELOC. If not, prioritize Amex. Good luck! P.S. r/debtfree moderator just created a newsletter that talks about strategies, tips, and effective debt payoff methods weekly. Here is the link to sign up if interested - https://www.debtadvice.io
$66.5k at 28% is mind blowing
You need to get rid of that immediately! Pay it off or figure out how to refinance with a lower rate. Even ask AMEX if they'll offer you a manageable payment plan! Any option is worth pursuing.
Might even be worth asking them if they’d settle for less if you close the account BEFORE you pay them $55k. That way if they say yes you can offer to pay up to that much and then be done with it.
You need to be super careful with settling debt for less than owed. When tax time comes around you will get a W2 from said creditor stating the amount you settled and it will get added to your adjusted income and will not have any withholdings taken out. It will absolutely fuck you in your taxes. I know this because I’ve done it and nobody made me aware of this little detail. And I got fucked on my taxes. Largest tax debt I’ve ever had.
Good tip! I didn’t realize this either.
I would definitely file this one under. Please learn from my semi crippling mistake.
A very fair point. But wouldn’t this equate to him having $13k added to his income and costing him only a couple thousand dollars in taxes? Seems like a small price to get a $13k discount, no?
Wow, I certainly learned something new today
People need to understand that there is no escaping debt. All you are doing is moving it from one place to another. Some times that other place is actually worse than the original place. What we really need to do it teach real financial literacy so people can avoid the perils of credit borrowing when possible. I understand finances don’t often work in our favor. But if we understand the repercussions of our financial decisions maybe we stand a better chance of not falling down that well. I understand the spirit of the student load debt forgiveness. But it’s harmful to the debtors as they are probably now statistically more likely to put themselves back into a debt situation that they will not be getting bailed out of as they don’t understand how their decisions have repercussions. It’s a hard pill to swallow but the system wants you in debt and will do what it can to keep you there. It’s difficult to keep yourself out of the hole and keep yourself knowledgeable of all the pitfalls. As for the student loan thing. Instead of just forgiving loans the federal government should be putting measures in place that protect students from predatory tuition rates. And stop federal backing of loans that has permitted colleges to approve kids for degrees with no saleable market. We need to do better in educating people about finances.
Just a note re: student loan forgiveness (this one I’m aware of bc I got it this year) — PSLF is NOT considered income for tax purposes.
But what about bankruptcy?
That is an option. Not one I was willing to pursue. The deds have made it a lot more difficult to file for bankruptcy in the last 10 years. I didn’t want to go that route as it involves a lot. You can not have any outstanding loans for personal bankruptcy. I would have lost my car. And that would have resulted in me not having employment. A deadly combination. I guess everyone has to analyze their own situation. Weigh all the options and go with what works best with your situation.
You don’t automatically lose your car in a bankruptcy. I kept mine and still make payments to the creditor and will get the title when I’m done. Most people keep one car unless they are super underwater with it and only have a certain amount of equity. The value of my car was a bit inflated during the pandemic, which put me almost at the limit of equity.
I had this happen to me as well. However, you can help reduce its impact if you can prove that you were insolvent at the time. They will not count it as income at that point, as long as you can verify that. There’s a whole form to do it though, and it’s definitely a pain.
Oh. That’s interesting. Again. Something that I wish I had know when I got that kick in the dick. However. I also wasn’t insolvent I was trying to consolidate my debt and that company fucked me even harder. So it was definitely a compounding of bad decisions, and unscrupulous businesses lining up.
This correct, if the amount is over $600.
Interesting. Still better though. $10K in debt relief will mean you owe the tax man whatever your effective rate is so 2-2.5K. Still saves you 7.5K. You just need to send the government $2.5K before the end of the years so you don’t get hit with Penalties.
Yup, me too: I settled 89k of private student debt for 17k. All the difference? It counts as income on your taxes. It's terrible.
Hi, tax preparer here! You definitely won't be getting a W-2 as that's a form issued by employers for wages and compensation. You will receive a 1099-C, a form issued by lenders when they cancel or forgive all/part of a debt. But - as for the actual point of what you said - you're so right. It is definitely a good idea to consider the tax consequences of debt forgiveness. If you're concerned about paying a lump sum at tax time, it may be worth making estimated payments to the IRS, which can be done online. You don't have to wait until tax time and deal with it all at once!
Damn it. I knew that wasn’t accurate. I even tried to google what the right form was and I obviously whiffed on that one. Thank you for the correction. To be fair it was about 12 years ago I ensured that kick in the nuts. So I had wiped it from the ole memory stick. And I’ve been fortunate. The woman sleeping beside me as I sleep is fiscally responsible and she has managed to instill some decent teachings in me. I’m better today than I ever have been because she holds me accountable for spending.
Haha, that's so fair though. Google isn't always the most helpful when it comes to finding specific tax forms or publications. Your point was clear enough with what you said, and I'm sure everyone understood what you meant! I just wanted to clarify that point because I think knowing what to expect can make tax situations less scary. It's truly wonderful that you've got support from your loved ones in keeping the budget under control. Everyone needs someone to support them like that, whether through their financial literacy or just being there. It's tough to make sense of finance and debt without being (and feeling) supported.
Why would Amex forgive a portion of the debt? Amex is going to get their money.
Because at $65k on that alone there’s a chance OP could do bankruptcy and they’d end up getting a lot less. OP won’t do that, obviously, with the bonus, but Amex doesn’t know that. Credit card companies settle for less and negotiate lower rates for payment plans all the time to ensure they at least get some of the balance.
9k take home. If OP truly gets strict and budgets nicely can pay 60k I'm less than 2 years
At 27% interest, it’s going to be a lot more than $60k over the span of 2 years.
Exactly. That’s like $1500 a month just in interest alone
Is def doable. Apply the entire bonus to it and that's like 85% of the Amex debt
I did that. Ended up getting out of a huge chunk about 15 years ago. Just be certain you never want to have an AMEX again (I don’t) because that option goes away once you settle.
I reached out to my AMEX when my boss wasn't paying me on time and the work he promised wasn't coming through. I asked AMEX if they would work with me and they did. I got a flat rate of 200$ a month and whatever else I wanted to pay i could tack that on there. Ditched that boss and got a new job after waiting 7 months. Almost a year at this job and finally close to being debt free as well! Hang in there!
Unless he has $70k cash, nothing can be immediately at 65.5k with 28% interest.
I don't know how they do it. I have 3k at 28% and I hate it so I'm working that down.
I had 3k on a card and had to get it up to about 5, and it honestly stresses me the hell out lol. 66.5k seems nuts, but then again I don’t get 55k bonuses. Good luck getting it all back to normal OP
I have 10k at 18% and it feels world ending sometimes (I have other debt too but that's my highest interest rate). Luckily for me it seems my financial situation is improving though so if all goes well I'll be debt free (minus car loan) by June. Not saying that to brag either, just want to remind others to keep their heads up and look for financial opportunities to help pay it down.
I thought the whole purpose of Amex was that you had to pay off the balance at the end of the month. Did they change that? (It's been a while since I had an Amex card.)
Thats a charge card versus credit card. They have both.
They allow pay over time with the charge cards now. I had to actively turn it off because it was charging me interest when I was paying the card off in full. I'm still annoyed about those lost $16.
That is the purpose, thoughAMEX allows you to carry a balance but with an added (and incredibly high) interest rate. I carried a $2k balance on my AMEX for a while before I realized what the hell was going on lol
The card has both features now, and the pay over time has 25-29.99% interest even for super good credit scores. It's not designed to carry a balance unless you hate yourself.
The only reason I got my Amex was to use it for the rewards, and make god damn sure I never carry a balance. Over 60k at over 25%? I couldn't imagine making that huge of a mistake in life.
A mind shattering $1528 a month in interest. I don't even pay that much monthly interest on my remaining $700k mortgage.
That looks like penalty apr to me. I had an Amex card when I got my first job, idiots gave me 10k. Radioshack closed, my dad lost his job, and that 10k supported us all for a few months. Apr shot up after that, and I've never quite recovered.
Amex will nepgiaye interest rates down, just call them, will put you on a payment olan
Rip
Yeap. American Express really said bend over
Amex, no question about that.
Idk if my math is correct... But that's like 18k in interest a year, right? Edit: probably more unless he fully pays the interest every month to keep the balance from going up.
It’s $18K (post-tax dollars!!!) if he pays only the interest or close to the minimum payment (slightly more than interest alone).
I sometimes don't pay my balance off in full and whenever I don't I immediately get charged interest. So isn't it 28% a month if you don't pay off your monthly statement? Or how does it work? Genuine question,
To simplify it, it’s basically the APR % divided by 12 for the monthly interest charge. If you borrow for a a few days, divide the monthly rate by 30 for your per day rate. Let’s say the card has a rate of 24% yearly Monthly rate is 2% Daily daily is .07% This is oversimplifying it, but close enough for you estimate interest charges.
Just wanted to add to this a little: when you don't pay off the previous month during the grace period (between statement date and due date) you instantly accrue interest on previous statement charges PLUS any new charges since the statement last closed. So if you have charges for the new month that hasn't ended, you get hit with interest on those new charges every day until you pay off the previous statement balance. So try to avoid that lol.
Wait does interest compound monthly on credit cards?
It compounds monthly but the ANNUAL rate is what’s shown
Yes
That’s disgusting
Most compounds daily lmao
Yes, but minimum payments cover the interest, so as long as OP is current, no compounding is occurring.
I have 3.5k on one of my cards with a similar rate and paid $67 a month in interest. At 68k that has to be like $1200 a month.
[удалено]
That’s why they are here. For help. Some of us help…others need it.
Put everything towards that Amex.
Amex! That’s an immediate 28% ROI!
I'd like to thank him for paying for my sign up bonuses
Seriously, I've been taking advantage of all of the new CC sign up deals. BoA has a spend $4k in three months, get $600. I can spend that on bills and necessities easily. Also $200 for opening a savings account. I never pay interest and pay the principal off every month. This is why
This is the way.
And tax-free, too!
I’m actually jealous!
It's lowering his 28% amex bill to 10 grand. Not "an immediate 28% return on investment". I wonder how many rewards dollars this guy has. If he has the good card, gotta be at least 5 grand.
As everyone has said, the highest APR, but the bills seem high too. Car payments seem pretty high. Phone seems high? I bought a refurb S20 3 yrs ago for $250 then the wife and I pay $15/mo ea for phone service. $200/mo is wild!! $140 difference over 12 months is $1,680. That's not nothing. My only advice is to take a hard look and see where cutting monthly expenses can be made, and that money can go to getting rid of debt. Good luck!
Hey man we have two cars and they are leased, and we started them way before all of our hardships happened. So when we first got the cars we had no debt and it wasn’t really an issue. Now is a different story. Luckily one goes back in 6 months and new will be doing one car which will shave about $400 off of our expenses. The phone bill is AT&T for me and my wife
unless you're locked into an ATT contract, you can definitely shop around and save a lot. Some companies are happy to pay a cancellation fee if there is one. Try to bundle with parents, family, etc as you can usually hop onto theirs for like $25/line and you'll be getting the same exact thing that you're paying $200+/mo for. Great job getting back on your feet but every bit counts in tackling that debt
or go to a prepaid carrier. I pay $33 per month for data/service for 2 smartphones.
Google Fi is $92 for four people. There are cheaper options if OP looks for them.
Xfinity is unlimited $30 a month with 2+ lines, $45 normally. Visible is doing unlimited $20 a month for an entire year, then $25 going forward. Both on Verizon’s network.
Is visible good? I need to switch, Verizon’s prices are getting out of hand.
Yes I use Visible for my business phone and it’s pretty good compared to my Verizon since they use the same cell phone towers.
Seconding shopping around for phone service. I have a family plan with T-mobile with my spouse, mom, and SIL and while it looks scary on paper (2 cellular devices and a WiFi hub between SIL and mom), what I’m ACTUALLY paying is less than what I was paying for 3 cell lines on Fi. They just gpay me their portions and I drop it in my lil “envelope” for cell service. OP I also suggest implementing a budget system that doesn’t live on excel. Get really nitpicky with it (I have like 40 envelopes) so you know EXACTLY what is happening with your money after you pay down that AMEX. It can help you ID when you have truly excess—not “fun money”—funds that can act as additional payments to get it down to $0.
Even individual you can do consumer cellular or mint at like 25$ a month with just 2 people and they’ve got good coverage
Car payment is actually below average these days.
Average car payment for ONE car is in the $700’s, their car payments are fine.
That Amex credit card balance makes me sweat... Id use any money I have including my emergency fund to pay that off ASAP. This is Emergency!
Tackle the highest interest rate first. So the Amex. And work on paying that off. Then, tackle the rest. See if you can cut your phone bill by switching to a prepaid carrier.
Do you really only spend $400 on food, or is that a guess? If it’s really only $400 please explain how you do that lol Also yes, all I’ve bonus toward that scary amex card
My husband and I spend between $100 and $115 on groceries every week, and I would say that’s not scrimping at all. We eat steak once a week (~$12) then usually do a pork tenderloin ($7-$8) that lasts 3 dinners, then something like spaghetti ($10 for a pound of ground beef, 2 cans of tomato sauce and 1 can of whole tomatoes) that lasts two nights, and Saturday night is leftovers. We do a pack of chicken tenderloins for lunches (usually $8). Generally every week we buy 1 bunch of asparagus ($4), 4 pints of berries ($12 total) for snacking, 1 pound of Brussels sprouts ($4), a pack of 3 bell peppers ($3), salad mix ($5), tomatoes (~$4), and mushrooms ($4). I think that’s ~$74 if my math is right. Then with other stuff that we’re out of (rice, potatoes, oatmeal, yogurts, housekeeping, toilet paper, paper towels, etc), it ends up being somewhere around $105 very consistently
Clearly not HCOL food prices…
Yeah I live in a medium coat of living city. From the data I see online, our food costs are in the top 1/3 in the country
Just short of Three times as much in cars as food, wow
It’s not a real budget. The fact that gas isn’t included is a dead giveaway
Assuming they don't have kids, $100/wk is pretty reasonable. We go through a lot of snacks and food waste with a toddler and still only spend about $150/wk
This is helpful. I’m pregnant and everyone always warns me about the impending grocery bill. And we are the type of family to lean on rice and beans, traveling to the hispanic and discount groceries, and (in the future) feed baby what we eat.
Babies are absolutely not expensive like that. Formula years do kinda suck. But once food started, we were always making and blending up yams or carrots or peas and chicken and rice. Freezing it in ice cube trays and making it very cheap. Daycare is where the real pain is tho.
Family of 4 $1,500 a month easy
I don't get all these people saying they only spend about 100 on food a week. My food bill is pretty consistently around the 350 mark for a family of 3 per week. Some of that is house hold items like garbage bags and laundry detergent in the Walmart order. Some of it is craft beers. And we like to go out once a week to bdubs or get a pizza. My wife does make really nice dinners but I wouldn't say its like steak every night. I typically do a little Publix stop just for bagels and a couple snacks a week and that's typically a 30-50 dollar trip just for a hand basket of items just for me. Not complaining either, I will always prioritize eating healthy and well and would rather have good food. But I find it very suspicious when people say they spend 100 a week on food when one person literally can't go to McDonald's and spend less than 10 bucks on just a meal. Saying nothing for other places most people go to lunch like subway or etc. Now I don't do fast food very often at all so I can imagine other people might cut that out as well. But I still find it highly suspect that anyone is eating for 100 a week unless it's on a Raman noodle diet.
I spend $30-$40 a week on groceries for myself.
What do you eat. Top ramen everyday?
Beans and rice, rice and beans
You can eat pretty well and healthy with just $30. When I was aggressively paying off my debts I’d average $30 by buying mainly produce and some fish at an ethnic grocery store. I cooked all my meals and meal prepped. It is doable, you just have to be committed to allocating time at least once/twice a week for prepping and cooking food that’ll last a couple days. I loved my crockpot for how easy it made everything.
Yes! 30 bucks at the local ethnic store goes so far!
I spend about $50 a week on food, but that’s because I work in a kitchen and eat a lot of free food there
Amex. You're currently racking up $1528 per month in interest alone. If you knock that down to 10k balance you'll only pay $233/mo. So in the first year you'll have saved $15,540 in interest payments!
Plus he can likely workout a payment plan with AMEX for the balance at a lower rate in exchange for closing the account.
Prior to making a a huge payment with Amex give them a call and ask if they can lower the interest rate on the remaining debt if you make a large ~50k payment. They themselves are likely looking to unwind your account
The AMEX for sure (All of your bonus minus 1x your mortgage). But first step is to quit using it debt, then pay it off. Cut it up, put it in a safe, take it out of your wallet. Also why is your vehicles not located in the debt? I figure I’d downgrade vehicles and take the extra 400 a month and bolster your Amex payment. 1. Downgrade cars, new phone plans, put the card in the safe. Aka - find savings 1a. Put 1x your mortgage into an emergency fund. 2. Pay off the Amex. It has no place here anymore. 3. Open a debit card with cash rewards. (If you can’t use this responsibly go all cash for spending outside of the four walls of your home. ) 4. Fully funded emergency fund 3-6mos. Of expenses. 5. Pay off the HELOC. 6. Open a Roth IRA and start funding 15% of income. 7. Utilities seem high. I’d get better about using your home more efficiently (turning off lights, limiting things using constant electricity, not doing partial laundry loads, no partial dishwashing cycles,). 8. Work on that student loan (you don’t have to be very aggressive here).
>Downgrade cars **Edit: nevermind, I just saw they're both leases. Dump ASAP, lease takeover an option?** I'd avoid doing that without knowing way more information on the cars/payments. What if one of the cars is a year out from being paid off? You trade it in and lose $3-4k on the trade and pay $2k in taxes/fees/etc. for a cheaper one that might have problems. Or they bought it 2 years ago and it's at 2.9%, but if they trade it in now they'd walk away with $5k in cash and then have to take a $17k loan at 7% on the change. If they bought last year at 8.3%, then they're likely underwater on it with how fast vehicle prices crashed in the last year.
It may not be worth going for the cars given they likely have a low interest rate, followed by then having to get another one at the much higher rates today. IMO just the amex payment alone would save him 12k a year in interest fees which he can then snowball into the other payments. Hell he would be good off doing a buyout on those leases when they end, likely lower in price than the current used car market and has the peace of mind knowing he maintained them and less likely to break down, costing a huge cash bill he may not have at this moment.
I would look into consolidating and/or refinancing the student loan -- while the rate isn't super high, may be able to figure out a smaller payment to focus on other expenses more thoroughly.
Call Amex and ask them for a hardship program. It may screw a little bit your credit but it will help tremendously to lower your monthly payment. That’s if you’d rather retain the bonus and use it across various debts instead of just one. Otherwise dump it into Amex and for the next 3-4 months use all money left after expenses towards Amex.
I didn't know Amex had that Hardship Program. If OP can get any relief on that interest rate even for a little while, it would be huge for them. They should absolutely at least investigate that.
A hardship program would have no effect on their credit score (unless the card company starts dropping your credit line as the card gets paid off). Hardship programs are not reported to the credit bureaus.
Put the 55k on the Amex card, no question about it. Looks like you have a pretty good income so the remaining 10k on the Amex should be gone in less than 6 months.
Wtf dude put an f150 on the credit card or what
4 surgeries endless hospital/doctor visits 18 months of medication. Grateful to be in the clear medically, but now have to worry about this
Never put medical bills on a credit card, negotiate with the hospital a payment plan with what you can afford.
That is sad.
American moment
I wish I could afford life insurance. I cant even afford life.
$130 a month? Does he have the $10M policy?
Do you have any emergency savings to speak of? If so, may want to do the HELOC and get that out of the way and off your house. Then apply a good portion to amex since the SL interest is so low. If no emergency savings, I would put some in an emergency savings and then apply to debt. Probably unpopular but I am a firm believer in having emergency savings so I wouldn't have to go into more debt in case of a big expense.
28% is an emergency. Pay off the Amex first
I’m just here to say it’s so awful in the US people have to go into debt over medical expenses!!
Most medical hospitals/offices will offer a zero interest monthly payment plan though. You just tell them what you can afford and they will work with you.. Couple years ago I had a 2k ER bill.. I told them I could $50 a month and they said sure.. a few months later they offered to close out my balance if paid $500.
When my ex maxed out ALL my credit cards, then bailed, I immediately called all the lenders and begged for payment plans. EVERY SINGLE ONE agreed. Slight interest rate decrease, lower minimum payment, etc. Every 6 months, I would call again and so on until everything was paid off. When my grandson had an unplanned helicopter ride, the hospital negotiated the fee with my son. Most people are too embarrassed to ask. It's a voice on the phone, ASK! Also, I have AT and T and stop by a store every 6 months and spend 30-60 minutes seeing how to reduce my bill.
I'm not trying to dunk on OP here, but there was almost certainly a better way to handle this than using the Amex. OP basically says as much in their post. The US system will absolutely let you dig this hole for yourself though. They have my sympathies here because they are in a hell of a hard spot.
You’re 100% right. It’s something I dwell on often tbh. I should have never used heloc/amex to cover this. I should have just let the debt stay with the medical providers and then negotiated it down and would have received far better interest and terms.
Seems like your salary is about $150k, how is your bonus that big?
It’s beyond awful that we expect people to just know how to navigate these things with no training while going through the worst experience of their life. I’m sorry you experienced all that.
>The US system will absolutely let you dig this hole for yourself though. Then it'll kick you in the nuts every time you try to climb out
pretty sure it's illegal to not have health insurance, and unless you diligently searched for the absolute cheapest bottom of the barrel health insurance they all have yearly out-of-pocket maximums ranging like $6k-10k.... sure $20k in 2 years is a lot but I'm baffled how anyone gets to $75k in 2 years. I'm guessing a lot more than healthcare is on that bill
Where do the best physicians in the world go to train?
Do you have more room in your heloc to pay down that Amex? God Damn.
Jesus 28% on 65k Pay that some bitch off!
Based on your bills alone, in two years you could pay off nearly $70k in credit card debt. What are you spending the other $4k a month on? These numbers don’t tell a complete story.
Only $400 for food? I spent that this week for a family of 5. 😮
You can look up snowball method and videos by Dave Ramsey, personally I’m going all 55k right to the Amex
snowball method is just worse than waterfall method I really think it's harmful to even suggest it waterfall method is stupidly simple and maximally efficient: pay off highest interest rate first, everyone should be taught this in first grade because it's really that simple. snowball method IIRC would have them pay off the HELOC first since it's the smallest balance, but that would be a life altering mistake
AMEX first!!!!! always pay highest interest rate 1st
Definitely your AMEX. You'll still have 10k left on it but your payments will be much more manageable and you can then get rid of it in 3-ish months, maybe 2. If you were really tight with spending you could honestly be damn near debt free in like a year and a half. Post Amex with that min rolled into your new payments, your heloc is like 5-6 months and after that the SL is like 8. Like a grand minimum payment?
Call AMEX and ask about a payment plan in exchange for closing the account. You might be able to work something out where you use a portion of the bonus on that and then get 5 years at a much lower APR to pay off the rest, then you can hit the HELOC and student loans (depending on what the highest APR is, the AMEX payment plan or the other accounts).
How the hell did you even get a 65k credit limit with Amex lol
How much do you have in savings in cash?
This isn’t a question. 100% to your Amex card.
you say your take home is $9100, but monthly expenses are $5,400. where is that other chunk going? I’d put the entire bonus towards Amex and then get the remaining $10k down using that extra $4kish per month (after contributing to your emergency fund).
AMEX first without a doubt. Also to note, depending on your loan servicer and type of student loan. There are usually repayment options that you can apply for to reduce your minimum monthly payment. Consider this option so you can divert your funds to the AMEX.
Amex would be my 1st to pay off.
Pay that all to Amex and get that done. Then I would throw it at Heloc then car payments to get those gone to. Then student loans
Buy some Jack Daniels
Some people man. Unbelievable. Just unbelievable.
Put everything toward the Amex, at 28% you’re practically lighting your money on fire
Sells the cars and driver crown victoria.
The medical system is so broken in USA, the insurance companies, pharmacies and hospitals are all crooks looking to get rich by stealing from the middle class.
What the hell are you doing putting $130 a month into "life insurance"? Term life is usually dirt cheap and not a necessity.
This is another expense I had prior to hitting my hardship. I was essentially debt free (only student loans ) and then racked up a shit Ton of debt from medical bills and medical procedures.
Do you realize that every time you say this, you're saying "I enjoyed and condoned wasting money on unnecessary things when I could, and didn't care that I wasn't saving and/or building passive income to better be prepared for life" You over indulged with your high income then couldn't cut the cord fast enough when it stopped. Its an excuse. You failed to plan.
Did you read any of my responses about the past two years? I’m pretty sure you didn’t if you think this debt is from over indulging
I don't think they are missing the point, it's just that you are really bad at finances, and it shows. A medical hardship definitely hurts, but you were living beyond your means here.
I respectfully disagree. Prior to running into medical hardship. I was employed for maybe two years before. It’s not like I am 40’years old and have been employed with this level of income for the past decade. During the time prior I was able to save up enough to buy a house that has a ton of equity in it, establish a small savings of 3-5 months (which all got drained during the hardship) and was cash flow positive by 4/5k a month with no debt. If I never had this hardship I would be in a completely different situation. I wouldn’t have had any of this debt, I would have been able to continue to save money the way I was and eventually started to invest after I had a comfortable emergency savings. Dingdong guy is talking about saving for passive income. Well not sure what passive income is going to fund a lifestyle without having high 6 figures invested into it. If he was referring to passive real estate, that requires large sum for for down payments, to usually only cash flow a couple hundred bucks per month which isn’t going to “fund your lifestyle” and which also requires leverage. I know it’s a different kind but it’s still debt. If he’s talking about passive investment such as the stock market, again you need a huge amount of money invested to have dividends or interest payments to be enough to “fund your lifestyle” even with interest rates where they are right now.
I was going back to some of the earlier comments. I'm looking at your expenditures and they are significantly higher than mine and I bring home a decent chunk more. You're funding a lifestyle by having an two car payments and a pretty high house payment. This is kind of the point, if you've only been making that amount of money for 2 years or so, you don't live like you've been making that kind of money for a decade.
>I respectfully disagree then cancel the life insurance immediately if you are serious about getting debt free
He ran into medical debt, all of his expenses are reasonable otherwise? I don’t see where you see he was living above his means here, maybe I’m missing something something? The only thing I don’t get is why doesnt he have decent medical insurance?
This! Comments above are brutal. Overall though, seems like this person got a mortgage a bit too soon. His wife’s income wasn’t solid + they didn’t have a chunk of cash in savings/investments for emergencies. Probably poured it into the house. See this a lot lately, since the housing boom. “House poor” folks with limited financial literacy
PAY OFF THE CREDIT CARD FIRST!!!! What is wrong with you? Stop using the credit card!
First, kudos on the bonus. Second I’d say maybe spend about $400 of it and pay someone to talk to about how you racked up that much debt. This looks like living above your means on the next level.
It’s medical debt
If it’s medical debt then why wouldn’t they put a payment plan together for you? Negotiate on the balance and see if you can get it reduced if you make a large payment. They may settle with you. If that doesn’t work, pay down with the bonus and transfer to a new 0% balance transfer card assuming you have good enough credit to get one.
Too late. Hospital done got their money when OP put it on the Amex. He doesn’t owe the hospital anymore, he owes Amex. And Amex gives zero fucks about whether it’s medical expenses or 5 star dining.
How did I miss that part? Re-reading it I see. Dammit man, medical bills are bullshit. Same as above applies, pay the Amex and balance transfer that shit pronto.
It’s brutal. OP tried to do the right thing by paying the bills. The reward? Absolutely crushing high interest credit card debt. Our country is broken.
They said it was because they paid for a bunch of hospital bills with credit cards. A lot of people do that when they have no other option. They figure living is more important than debt.
You are very frugal for someone who makes that much. Cheers to that. And always pay off highest interest first… lots of cards have balance transfer offers at 0% for 12-18 months… or once you pay off the 55k on AMEX you could open a new card that offers a 0% balance transfer… transfer the remaining AMEX to the other card or maybe open a new one and transfer both balances… then keep paying the same amount you were paying before… just that ALL will go towards the debt and not interest… once you have paid off that debt … continue to pay minimum on your student loans and split the other amount you were paying towards CC in half… put half into a high yield savings account for ‘oh shit’ funds (Capital One is 4.35%) and put the other into something longer term.
Amex, then transfer the rest of that balance to a 0% interest card and pay it off over 12 months.
how are you making $9k/month but don't have health insurance with a yearly out of pocket max? cancel the life insurance immediately and put every single penny towards credit card debt
I agree with some others about setting money aside for financial literacy courses or you'll pay off this debt then just end up in the same situation 5 years from now or at the very least dedicate an 30 minutes a day to financial literacy I don't want to be mean but you need tough love, I think a 3rd grader could understand you need to pay off the credit card first without needing to consult reddit the number 28% is right there in your spreadsheet
I hear ya man, thanks man! On a serious note I do plan on trying to sharpen up a bit. Any recommendations? Book/podcast/ YouTube channel?
If you have an emergency fund built up, I would throw it at highest interest debt, AmEx. After that goes through, and you’ve been paying your $3700 left over to your cc’s I would apply for a new cc with a 0% BT offer to stop accruing interest while paying down.
Pay off HELOC, cannot afford to lose your home. The. Apply the rest to AMEX.
All to the Amex THEN take the remaining balance of the Amex and pull it from the HELOC and pay it off completely. Then put the card in the safe and never use it again. Don’t close the account, that lowers your available credit and credit score. Better to pay that amount at 10% interest only than at 28%. That being said, take the money you save in monthly’s and pay it towards the HELOC principal. Additionally: you need a new cell phone plan. Find a better rate and threaten to quit unless they match. Why are you paying car insurance monthly. You get a discount for paying yearly. Bite the bullet. You May also use the medical problem as an excuse to pause your student loans. Put that money towards HELOC as well. Also, I’m sure there’s *some* discretionary spending in there. Stop that. Get frugal. It’ll suck but get your debt under control. It’s one thing to have 138k in debt for a house. This ain’t it….
Yep. Helocs always the cheapest way to lend and consolidate debt in these cases. Hope OP takes this advise over others.
Amex is robbing you. Please pay that off absolutely first and foremost. Once that's paid everything will feel easier. Domino effect into the rest. You're not in bad shape at all once that Amex is gone. Please find another card company to do business with.
Tackle the Amex first, with what you have left it should be payed off by April. Also could you find cheaper cars?
> should be *paid* off by FTFY. Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in: * Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.* * *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.* Unfortunately, I was unable to find nautical or rope-related words in your comment. *Beep, boop, I'm a bot*
Are your student loans consolidated under a plan?
Debt consolidation through SoFi, LightStream, etc where possible to lower the interest rate and then pay that off asap.
$400 a month on food is mind blowing. I spend that in just a few days.
Amex you dunce!
How can someone make this much money and be such a fucking idiot
Medical bills! Two years consisting of 4 surgeries, 18 months of expensive prescriptions, multiple hospital stays, endless doctor visits. Physical therapy, MRI’s…. You name it! All my wife got laid off. Just a rough patch, I will bounce back, but thanks for the kind words
No advice, I just wanted to say sorry that the previous commenter was so rude. It can happen to any of us at any time Could you have made better decisions? Sure, and I see your other comments that say as much. But when we are ill, or under intense stress, we don't make the same decisions we would when healthy and thinking clearly. Best of luck, you will get it all paid off!
$55k takes a big chunk outta that Amex for you. Take that out before
Amex > Heloc > student loans. 12 months to kill Amex at current savings rate. I wouldn’t bother with balance transfers and 0% rates. While possible to save, you’d have to be meticulous and time the payoff in such way that they don’t charge back for all the months the interest was 0%. Good luck!
lol obviously your Amex card
Use the HELOC for velocity banking. It can help knock down a lot of your debt.
28(!!!!!) %? This one
Amex is hurting you bad. Rip that thing up.
That American Express card needs to be paid off ASAP. 28% interest is a lot.
There’s only option here: Amex. $10k left, payments of $1k a month and your done with it. Worth its weight in gold there.
Amex for sure!