Bill consolidation question.

[harderthansoft]

I currently owe around 23500 out in debt.

8000 is to lending club and is @ 7.0 % interest. Looking at 22 months left to pay.

2100 is alimony with 6 months left to pay.

13241 is a 401k loan with 22 months to pay.

So in 6 months I won't have to pay that 350 alimony anymore. I am wondering if I should get a loan from lending club and pay everything off. Get that 13300 back into my 401k. It's currently setting at 225000. The 13251 could help it grow faster or fall faster. Depending on the stock market.

I would be saving around 600 a month total. But also right now the 401k loan payment each week is pre tax. Any thoughts. I could put the 350 from alimony towards lending tree. Pay it off earlier but I probably wouldn't.

 

[Crakajak]

I would pay off the highest interest loans first.JMO

 

[NE GA Pappy]

I wouldn't borrow money to invest in the 401... there ain't no way that makes money for you. The interest would eat up any profits you make in the 401.

If it were me, I would pay off that alimony like PDQ. Then I would put the extra $350 toward the lending club and get it paid off real quick too... Kill both those debts this year. Start in Jan, 2019 paying the 401K, with the combined payment of the alimony, the Lending Tree, and what you are paying on the 401 now.

 

[NE GA Pappy]

[QUOTE="harderthansoft, post: 11245856, member: 114471"

I would be saving around 600 a month total. [/QUOTE]

You wouldn't be 'saving' anything, you would just be delaying the payments, and increasing your debt because of the additional interest you will be paying. If you want to 'save' some money, write and check for $2100 and pay that alimony off.... there.... you are 'saving' $350 a month right off the bat, and you don't have that payment any more.

 

[harderthansoft]

I'm not borrowing to invest in 401. I would be paying off my current loan. So that 13000 would go back into my 401k. Thats 600 alone I wouldn't be paying out now a month. And if i had 2100 to write a check ro get it out the way I woudnt need to borrow that amount. It may be best to struggle along for 2 yrs. But I was trying to get to where I would have some breathing room. The loan would only be 700 and some. But for 3 years.

 

[bassboy1]

I'm not borrowing to invest in 401. I would be paying off my current loan. So that 13000 would go back into my 401k. Thats 600 alone I wouldn't be paying out now a month. And if i had 2100 to write a check ro get it out the way I woudnt need to borrow that amount. It may be best to struggle along for 2 yrs. But I was trying to get to where I would have some breathing room. The loan would only be 700 and some. But for 3 years.

You will end up paying a fortune extra to finance this over 3 years, instead of killing it all off in the next year - year and a half. All you are really doing is kicking the can further down the road, to free up a little cashflow now. Realistically, in 6 months, the alimony is done, and that frees up a good portion of the amount you were trying to free up, but at no additional cost.

Seriously, follow the path NE Ga Pappy suggested. Eliminate any unnecessary spending this year (that includes fishing/hunting).

If you kick the can down the road, you'll never end up out of the woods - something else and something else will pile on. Get past it now, and then you have your life back.


You should probably start listening to the Dave Ramsey podcast (free online stream on his website).

 

[NE GA Pappy]

I'm not borrowing to invest in 401. I would be paying off my current loan. So that 13000 would go back into my 401k. Thats 600 alone I wouldn't be paying out now a month. And if i had 2100 to write a check ro get it out the way I woudnt need to borrow that amount. It may be best to struggle along for 2 yrs. But I was trying to get to where I would have some breathing room. The loan would only be 700 and some. But for 3 years.

Sure you are borrowing to invest in your 401. You said it yourself that it will build money faster if you put that money in there now. If you borrow the money, and put it back in the 401, isn't that an investment?

I hate to hear that you had to borrow money from it to start with, but borrowing more to get out of that crack won't help you any, except to pay more interest for a longer period of time.

If you don't have $2100 to pay off that alimony debt, the first thing I would do is sell some stuff. Guns, knives, cars, boats, campers, or anything else that I didn't have to have.... pay that alimony, and then set aside a rainy day fund that you don't touch unless you have an emergency...( An emergency is not that Bass Pro has the latest depth finder on sale, and you can save $400 if you buy it this week) Keep paying your other loans, and as soon as you have that alimony paid off, start laying that 350 a month into a long term saving account until you have at least a 4 month of living expenses reserve.... that would be all your payments, food, utilities, everything you would have to pay out for 4 months. Then, start attacking the smallest bill and get it paid off so you can then put all your resources into paying off the balance.

It might take you 24 to 30 months to get this all paid off and worked out, but that would be much better than borrowing more money to get some breathing room now, because you know what???? If you have that extra $$$ in your pocket, you are going to spend it on something you really don't have to have to live. You will turn around in 12 to 18 months, and be in the same place you are now because you haven't learned to manage your money wisely yet.

I wish you good luck, and hope things work well for you.

 

[normaldave]

NE GA Pappy and bassboy1 have given advice worth way more than what you owe. Heed it, and win the game.

Try not to get tangled up in the math and interest rates, what you need is the feeling of victory through progress. Yep, find Dave Ramsey on the radio/online. Setup an ironclad budget, find out where your money is going, and in the future, don't ever, ever borrow from your 401K again. (did I say ever)?

Write down your debts, smallest to largest. Ignore interest rates, this or that, don't overcomplicate it. Pay minimums on all but the smallest one. Find every spare dollar and throw it at the smallest until it's gone. Bam! then take that smallest payment you were making, plus all the spare dollars you can find/earn, throw it at the next biggest, and so on. It's called getting traction, the emotional relief of making the last payment on a debt is so great, it fuels the next level, and motivates you to stay on the task. (You'd think I'd been down this road before...)

 

[Jim Baker]

Pappy is right and trying to borrow your way out of debt is iffy at best. To many things can happen. If you are getting your debts paid now stay the course. Use the consolidation route only in case of an emergency. Also pay yourself first. Any income that can be save should be.

 

[KyDawg]

Consolidation is useless, unless you seriously change your spending habits. Do as suggested make a budget and live by it. Borrowing your way out of debt is a hopeless endeavor.

 

[JackSprat]

45 years in the debt adjustment business.

You CANNOT borrow your way out of debt. Been tried 10s of thousands of times - it will NEVER work.

Borrowing money to invest in the stock market is a double dose of NO. (yes I know it's in a 401 (k) )

First the alimony is the LAST thing you should prepay. It's not bearing interest.

There are creative solutions, for ex. sell your car, buy a beater - cheaper insurance, put the sales money to good use.

PM me if you have specific questions.

 

[harderthansoft]

Some really good advice on here. Thanks for all that responded.