Best way to get out of CC debt

OP HERE. Thank you so much for all of your suggestions.

Here's what I have gotten done so far today.

I signed up a for an Amex CC with 0% interest for 15 months and zero charge for balance transfers. I transferred $7000 in CC debt over to that card from my high interest SW card. Thinking we will either open another zero interest card to move more CC debt to (Amex maxes out at $7500 allowed for balance transfers) or we may just start snowballing the one with the high interest rate.

I called the hospital and set up a payment plan for my bills there. They were not able to lower any bills but at least they are now at a manageable monthly amount.

I got the Dave Ramsey book out of the library (normally I would have just ordered it from Amazon, but trying to be frugal here!).

Really appreciate all the suggestions and would love any additional ones anyone has. Gong to look at them more indepthly over the next couple of days. Have a long way to go but at least I feel like I made a dent in it today.

One thing to clarify is that we are not currently contributing to the college funds. Most of that $$ we accumulated when the kids were really young and we had saved a lot even before they were born.

I wouldn't have opened new cards, that's just a temptation. Make sure you understand the terms of your card

I would've pulled from the college funds. It's not the greatest idea, but unlike other funds you have, the college ones you can put the money back in.

If you can find anyway to get a job, I'd do it. If you have anything in the stock market that is worth selling off, maybe a couple shares sold could help.
 
I wouldn't have opened new cards, that's just a temptation. Make sure you understand the terms of your card

I would've pulled from the college funds. It's not the greatest idea, but unlike other funds you have, the college ones you can put the money back in.

If you can find anyway to get a job, I'd do it. If you have anything in the stock market that is worth selling off, maybe a couple shares sold could help.

You can't pull from college funds without major tax penalties unless the money is used for qualifying educational expenses (assuming we are talking about 529 plans).

Opening up a card with a maximum credit line for a balance transfer isn't a temptation. They already have other credit cards. Using zero fee, zero interest offers to pay off debt is a heck of a lot smarter than paying high monthly interest fees on credit card debt.
 
You can't pull from college funds without major tax penalties unless the money is used for qualifying educational expenses (assuming we are talking about 529 plans).

Opening up a card with a maximum credit line for a balance transfer isn't a temptation. They already have other credit cards. Using zero fee, zero interest offers to pay off debt is a heck of a lot smarter than paying high monthly interest fees on credit card debt.

Well, having the OP's descriptors of home life (which probably should've been left out of this), I'm sure there's a thing or two that could be given up as well or sold and it could make a dent in the amount owed. Comes down to what a person is willing to give up.

I've seen other threads like this in the past and a question that is thrown out there is... what luxury things do you have that you can live without? Do they have services that could be cut (ie lawn care, housekeeping, etc) and just done DIY? I think that may apply here for a time to pay off the debt, instead of taking a hit on the credit score for new cards.
 
Bank of America has a card that has 0% interest for two years, I think that balance transfers might have a different interest rate but is worth checking out. Checks out the points guy for recommendations on credit cards.

I would look into borrowing from your 401k. We can borrow from our 401k, for any reason for 60 months. (10 years for the purchase of a house). The money for ours comes out of your paycheck (so you never see the money, it’s not tempting you to use it for another reason). The interest paid is paid back to you. Meaning if you borrow the money at 4%, the interest is paid back into your account, so in essence you are paying yourself back. On our 401k managed by Fidelity, the only charge is $50 to process the loan.

It is much preferable I think to a home equity loan or taking money out of your retirement accounts. Also agree that if you aren’t, stop contributing to the college fund and use that to pay down debt.

Good luck, all of us have times that are out of our control and this sounds like it.
 
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Well, having the OP's descriptors of home life (which probably should've been left out of this), I'm sure there's a thing or two that could be given up as well or sold and it could make a dent in the amount owed. Comes down to what a person is willing to give up.

I've seen other threads like this in the past and a question that is thrown out there is... what luxury things do you have that you can live without? Do they have services that could be cut (ie lawn care, housekeeping, etc) and just done DIY? I think that may apply here for a time to pay off the debt, instead of taking a hit on the credit score for new cards.

The thing is, when one has assets that exceed their debts, the are not really "in debt." The OP had sudden expenses pile up, and seems to have *possibly* overreacted (I am not trying to tell people how to react to things BUT if this was me, and I had that much equity in a home and $300k in college savings, along with substantial retirement accounts, $30k debt wouldn't phase me at all).

This family isn't at a point where they need to start selling off their belongings. I don't get the feeling they are in danger of becoming homeless or not being able to eat. The OP simply wants to pay off these bills a.s.a.p., which is understandable. Considering these are mostly medical bills, and expenses related to a medical issue, implying that having credit cards and using them irresponsibly got them into this situation isn't fair.

Also, opening credit cards to do a balance transfer doesn't ding your credit that much, believe me. My credit has never dipped below 775 and I currently have 3 credit cards to my name, 2 of which I use for balance transfers and all of which have credit limits over $25,000. Last time I opened up a new card (Chase Sapphire Reserve), my score dropped a whole 5 points from 798 to 793. You know what actually RAISED my credit score about 25 points recently? Co signing on a new car loan for my husband. My credit score was starting to fall from "lack of loan installment payment information" and this did the trick. We don't have a mortgage, so we needed a loan to boost our scores.
 
The thing is, when one has assets that exceed their debts, the are not really "in debt." The OP had sudden expenses pile up, and seems to have *possibly* overreacted (I am not trying to tell people how to react to things BUT if this was me, and I had that much equity in a home and $300k in college savings, along with substantial retirement accounts, $30k debt wouldn't phase me at all).

This family isn't at a point where they need to start selling off their belongings. I don't get the feeling they are in danger of becoming homeless or not being able to eat. The OP simply wants to pay off these bills a.s.a.p., which is understandable. Considering these are mostly medical bills, and expenses related to a medical issue, implying that having credit cards and using them irresponsibly got them into this situation isn't fair.

Also, opening credit cards to do a balance transfer doesn't ding your credit that much, believe me. My credit has never dipped below 775 and I currently have 3 credit cards to my name, 2 of which I use for balance transfers and all of which have credit limits over $25,000. Last time I opened up a new card (Chase Sapphire Reserve), my score dropped a whole 5 points from 798 to 793. You know what actually RAISED my credit score about 25 points recently? Co signing on a new car loan for my husband. My credit score was starting to fall from "lack of loan installment payment information" and this did the trick. We don't have a mortgage, so we needed a loan to boost our scores.

Again, what luxury are you willing to live without for a small time to pay off the debt?

Also, the the DD was in a horrible accident. Was she at fault? Could the family pursue legal action for the injuries and medical bills resulting from said accident?
 
Again, what luxury are you willing to live without for a small time to pay off the debt?

Also, the the DD was in a horrible accident. Was she at fault? Could the family pursue legal action for the injuries and medical bills resulting from said accident?

OP never said car accident.

And why do you assume everyone spends money on luxuries? We are in a debt payoff/savings build up phase right now but we aren't spending money on anything we don't need to be. But we also aren't in dire financial straits and don't need to start doing things like cutting cable or eating ramen noodles every day. You don't need to give up all the things that help you enjoy life while paying off debt. Honestly, everyone does what works for them.

From a strictly proportional standpoint, we have a much higher ratio of debt to savings than the OP but we are not in panic mode. We still have a positive net worth, all accounts considered. We are planning a nice family vacation this summer, like the majority of people on here, while still paying approximately $2000/month towards our 0% credit card debt. Everything will be paid off by November.
 


OP never said car accident.

And why do you assume everyone spends money on luxuries? We are in a debt payoff/savings build up phase right now but we aren't spending money on anything we don't need to be. But we also aren't in dire financial straits and don't need to start doing things like cutting cable or eating ramen noodles every day. You don't need to give up all the things that help you enjoy life while paying off debt. Honestly, everyone does what works for them.

From a strictly proportional standpoint, we have a much higher ratio of debt to savings than the OP but we are not in panic mode. We still have a positive net worth, all accounts considered. We are planning a nice family vacation this summer, like the majority of people on here, while still paying approximately $2000/month towards our 0% credit card debt. Everything will be paid off by November.

I never said car accident. However, a little backstory could help.

The reason for the assumption would be the given info that the OP stated.

I'm gonna stand behind my other question, the question we can all ask ourselves when looking for a little financial breathing room.... what luxuries can we afford to give up for a short or prolonged period of time? It could be something as large as living accommodations or as small as buying store brand vs name brand while grocery shopping. The meaning of luxury will vary among everyone. Keep that in mind.
 
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OP HERE. Thank you so much for all of your suggestions.

Here's what I have gotten done so far today.

I signed up a for an Amex CC with 0% interest for 15 months and zero charge for balance transfers. I transferred $7000 in CC debt over to that card from my high interest SW card. Thinking we will either open another zero interest card to move more CC debt to (Amex maxes out at $7500 allowed for balance transfers) or we may just start snowballing the one with the high interest rate.

I called the hospital and set up a payment plan for my bills there. They were not able to lower any bills but at least they are now at a manageable monthly amount.

I got the Dave Ramsey book out of the library (normally I would have just ordered it from Amazon, but trying to be frugal here!).

Really appreciate all the suggestions and would love any additional ones anyone has. Gong to look at them more indepthly over the next couple of days. Have a long way to go but at least I feel like I made a dent in it today.

One thing to clarify is that we are not currently contributing to the college funds. Most of that $$ we accumulated when the kids were really young and we had saved a lot even before they were born.

Does the retirement plan have a loan option? While it's not ideal, if you have many years to retirement, you pay the interest back to yourself, and don't have the tax hit.
 
Does the retirement plan have a loan option? While it's not ideal, if you have many years to retirement, you pay the interest back to yourself, and don't have the tax hit.

If one is going to do this, now is the best time. Better to borrow from a high market rather than a low one, where your contributions will go further.
 
Since you have so much equity in your house you might consider refinancing and adding what you need to pay the debt off into it. My parents did that a couple of times. Is it the best idea, if it's a lower interest rate than where the loan is and your mortgage payment stays the same or goes down I think it's a feasible option.

The 0% interest card is a good idea though it only hits part of the debt, unless that transfer took most of the CC debt. Pay off the higher first and then the 0%.

As for applying for more cards hurting your credit score, that's not true. I've opened 4 cards this year and my credit score has gone up and is over 800 now. I don't carry balances on them but in an emergency would after my savings were used. You can only plan for so much, which this family did. This would have ruined more families than not, so I consider this family lucky they've been able to do all they need to and are focusing on helping their daughter get better.

It would be a good idea to talk with a financial planner and see what they say. I've read one that does consider having a home equity line open and available a good emergency net vs credit cards, so as with all of the advice in this thread, it's about what works best for you and no one should judge in the end what's decided just because it's not what you would do.
 
A few years ago I paid an installment plan to a hospital for a few months then told them I was getting a windfall and I would pay them in full if they cut down the total bill because it wouldn't cover the balance. They took 40% off. They had a form ready for it so must be common, the form said the agreed amount would be considered paid in full if paid within 30 days. Worth a shot to lower the medical bill. You could pay it with home equity, credit card, whatever.
OP HERE. Thank you so much for all of your suggestions.

Here's what I have gotten done so far today.

I signed up a for an Amex CC with 0% interest for 15 months and zero charge for balance transfers. I transferred $7000 in CC debt over to that card from my high interest SW card. Thinking we will either open another zero interest card to move more CC debt to (Amex maxes out at $7500 allowed for balance transfers) or we may just start snowballing the one with the high interest rate.

I called the hospital and set up a payment plan for my bills there. They were not able to lower any bills but at least they are now at a manageable monthly amount.

I got the Dave Ramsey book out of the library (normally I would have just ordered it from Amazon, but trying to be frugal here!).

Really appreciate all the suggestions and would love any additional ones anyone has. Gong to look at them more indepthly over the next couple of days. Have a long way to go but at least I feel like I made a dent in it today.

One thing to clarify is that we are not currently contributing to the college funds. Most of that $$ we accumulated when the kids were really young and we had saved a lot even before they were born.
 
Make sure you understand the terms of your card

absolutely. with some the fine print discloses that if you at so little as a day late or a penny under the minimum payment at any point during the introductory period they go back to day one of the balance transfer and retroactively calculate/bill you at the high end interest rate for all those prior months and cancel the 0% offer for any remainder of the original offer (then tack on a high late fee and underpayment fee on top of it).
 
absolutely. with some the fine print discloses that if you at so little as a day late or a penny under the minimum payment at any point during the introductory period they go back to day one of the balance transfer and retroactively calculate/bill you at the high end interest rate for all those prior months and cancel the 0% offer for any remainder of the original offer (then tack on a high late fee and underpayment fee on top of it).

This is true. I have a balance transfer right now on my Southwest Rapid Rewards premiere card. That is the only balance. My annual fee just hit on March 1 ($99 fee) and they IMMEDIATELY started charging purchase interest on the fee. By the time my statement posted 10 days later, they had assessed a $0.49 interest charge. I fought it and they reversed the charge because nowhere in the fine print on the statement indicate that annual fees are subject to purchase interest rates. They tried to claim it did because we had a balance transfer. Nope. They removed it and I immediately paid the $99 fee. They will try ANYTHING to get extra fees out of people.
 
Even though you are a SAHM you could get a part time job to help out a bit. I know you said the DD has rehab but being part time you could hopefully work your schedule around your daughters needs.

The penalty for taking money out of a 401K is 10% so you would be penalized $3000 for taking out $30K. the 10% penalty has to be less than the interest rate you are paying on those credit cards. Just something to think about. Then you can start paying yourself back by putting more into your 401K
 
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Even though you are a SAHM you could get a part time job to help out a bit. I know you said the DD has rehab but being part time you could hopefully work your schedule around your daughters needs.

The penalty for taking money out of a 401K is 10% so you would be penalized $3000 for taking out $30K. the 10% penalty has to be less than the interest rate you are paying on those credit cards. Just something to think about. Then you can start paying yourself back by putting more into your 401K
.

The penalty only applies for a withdrawal. A loan from one's 401k has no penalty or tax consequences if it's paid back timely.
 
Even though you are a SAHM you could get a part time job to help out a bit. I know you said the DD has rehab but being part time you could hopefully work your schedule around your daughters needs.

The penalty for taking money out of a 401K is 10% so you would be penalized $3000 for taking out $30K. the 10% penalty has to be less than the interest rate you are paying on those credit cards. Just something to think about. Then you can start paying yourself back by putting more into your 401K

If you do a straight withdrawal the penalty is 10% PLUS the amount you take out is subject to income tax. As mentioned, a 401k LOAN does not asses these penalties.
 
Even though you are a SAHM you could get a part time job to help out a bit. I know you said the DD has rehab but being part time you could hopefully work your schedule around your daughters needs.

The penalty for taking money out of a 401K is 10% so you would be penalized $3000 for taking out $30K. the 10% penalty has to be less than the interest rate you are paying on those credit cards. Just something to think about. Then you can start paying yourself back by putting more into your 401K

If her daughter can't be left alone for any amount of time, even a part time job is probably impossible. Based on the fact that the husband missed 2 months of work due to this issue, it sounds like the daughter needs a very high level of care.
 
OP here.

DD is actually back at school but is having another surgery next month. She has PT 3 days a week and a multitude of other appointments. I also am the primary caretaker for my elderly dad and my DH works crazy hours and travels quite a bit for work so a part time job is not really feasible at this time.

Thanks for the heads up on the fine print for the balance transfers. I plan to just set up an automatic payment for that card and not make any new charges on it so hopefully that will not become an issue.

Still looking at some other options but I think we are going to cash in some stocks we have to pay off one of my DH’s credit cards and then we will both just have one card each to worry about.

College funds are in accounts that can only be used by the kids without incurring substantial penalties so we are not going to touch those. Looking at some possible options with our retirement funds.

To those that suggested we get rid of some of our luxuries, we have done a lot of that already although I wouldn't say we lived a luxorius lifestyle previously. We live in an expensive part of the country so our house value is considered pretty typical. We cut our own lawn and clean our own house. We are cutting corners right now wherever we can but I’m sure there is always more that can be cut.

Feel like we are making some good progress thanks to all of your suggestions.
 
OP here.

DD is actually back at school but is having another surgery next month. She has PT 3 days a week and a multitude of other appointments. I also am the primary caretaker for my elderly dad and my DH works crazy hours and travels quite a bit for work so a part time job is not really feasible at this time.

Thanks for the heads up on the fine print for the balance transfers. I plan to just set up an automatic payment for that card and not make any new charges on it so hopefully that will not become an issue.

Still looking at some other options but I think we are going to cash in some stocks we have to pay off one of my DH’s credit cards and then we will both just have one card each to worry about.

College funds are in accounts that can only be used by the kids without incurring substantial penalties so we are not going to touch those. Looking at some possible options with our retirement funds.

To those that suggested we get rid of some of our luxuries, we have done a lot of that already although I wouldn't say we lived a luxorius lifestyle previously. We live in an expensive part of the country so our house value is considered pretty typical. We cut our own lawn and clean our own house. We are cutting corners right now wherever we can but I’m sure there is always more that can be cut.

Feel like we are making some good progress thanks to all of your suggestions.

I still recognize that you did not answer anything about the initial accident itself. Not to stir up memories or whatnot, but if these are from that, why is insurance falling short and if needed, why was legal action not taken to cover the medical bills?
 

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