#FinancialAdvice #InvestmentStrategy #DebtManagement
Hey everyone! 👋 Need some input on a tough decision regarding my finances. Here’s the situation: I’m a 22-year-old guy about to graduate school and start a full-time job that pays $3500-$3600 a month after taxes. However, I’ve accumulated $7500 in credit card debt from living as a full-time student and working weekends. On the flip side, I have $8k in investments from my previous job.
So, the big question is: Should I withdraw my investments to cover my expenses for a few months and rebuild later, or tough it out and keep chipping away at my debt? 🤔 I’d love to hear your thoughts and any advice you have to offer!
Here’s a possible solution that might work:
– Consider withdrawing a portion of your investments to immediately pay off a chunk of your credit card debt
– Create a budget to ensure you’re living within your means once you start your new job
– Save up an emergency fund to avoid falling back into credit card debt in the future
What do you think? Let’s brainstorm some ideas together! 💡💰
Yeah your going to have to use the 8k you have to pay it off. The interest on the investments doesn’t exceed the interest on credit card debt.
Paying off CC debt is the equivalent of investing in an insanely profitable guaranteed investment. Rates are usually 15-20%+ which you will have an extremely hard time beating in any investment vessel.
What kind of investments and in what kind of accounts. FHSA TFSA RRSP or regular accounts.
This is simple arithmetic. Which has the higher interest rate – the investments or the credit card debt? You can figure out the answer. (Unless of course the investments are FHSA or RRSP where you’d have tax implications for any withdrawal; TFSA is not a problem.)
I guess I understand being the beginner, but I just don’t get how people can’t do simple arithmetic about interest rates.
I would.
– Find a 0% interest credit card for 11-15months
– Consolidate the debt under the new card
– Collect interest on the investment
– Pay off the debt once the 0% interest expires
This is not financial advice, just what I would do personally.
RRSP is the only investment you generally shouldn’t liquidate to pay off CC debt (because of withholding taxes)
Anything TFSA or unregistered you should sell and pay off the CC, then rebuild your investing accounts as you’re able to. CC debt at 18-23% IS AN EMERGENCY
If it’s not in an RRSP it’s definitely worth taking out and paying CC debt
I know one person that shops credit cards, meaning he will apply for a new 0% card once the old one no longer offers the 0%, he was able to knock off a pretty decent amount of debt without borrowing from a bank.
impressive amount of spending in just 9 months.
Withdraw and pay debt. CC interest rates are really bad. If you can get a student line of credit.
I wouldn’t withdraw from investments unless you absolutely have to. Depending on the taxes, it has to be added back to your income at the end of the year. Perhaps speak to your bank about options. Maybe you can get a consolidation loan or even a personal line of credit, which would have a lower interest rate so you can transfer the debt to that and have a lower monthly payment. There’s almost always a better option than withdrawing on investments.
How disciplined are you? Would you be able to save $8,000 as fast as you would be able to pay of the cc debt?
Personally, I’d get a $10,000 line of credit and pay of the cc. Then pay off the loc as quickly as possible. You can then keep the loc at zero for future emergencies.
Without knowing whether those investments are in RSP’s or something else it’s hard to comment. (Jokers in this sub think all investment decisions are based on one simple subtraction calculation, you need to factor in both taxes and the loss of RSP room – which is greater for you due to your young age).
Edit: honestly best advice is to transfer to a zero or low interest credit card and pay it off – you always want some cash reserves as well.