Pay off credit cards, or downpayment on a home?

[sdifox]

Originally posted by: b0mbrman

Originally posted by: sdifox

Originally posted by: b0mbrman

Originally posted by: dainthomas
If the choice is between:

1. pay off credit cards
2. buy (x)

Always choose 1. Especially in this case, because saving for a down payment is usually a losing strategy even WITHOUT credit cards.

I've got tens of thousands in credit card debt right now and today I bought x such that x was a bagel.

Also, I have cash--enough to pay off the credit cards--just sitting in my savings account.

You say always, but I don't think I'll be doing #1.

hahahaha, and your savings account is giving you a higher return than the CC interest charges?

5% is still greater than 0%, right?

Ha ha, indeed.

If you got a 0% APR CC card, yes, cashflow-wise it makes sense to leave the money in savings, however, it does negatively affect your credit rating. Fine and dandy if you are not buying a house like the op wanted to do.

 

[fLum0x]

if you don't pay off the credit cards now, how are you expecting to afford a home and the credit cards later?....duh

 

[5to1baby1in5]

Originally posted by: BKLounger
pay off the credit cards. Then burn all but one of them and then pee on their ashes and be glad they are gone.

Paying off the debt first is the obviously correct answer. This will help with the debt/income ratio.

Do not close any accounts if you can help it. Leave just a little ballance in there or keep using it if it's a credit card. This will give you a large credit availiable, but a small ballance.

I believe this will help your credit score the most, and get you the lowest rate when you do invest in a home.


Option #2 would be to default on the current loans, pocket the money, and sponge off your future wife's credit for the next 10 years.

 

[Kelemvor]

Having CC debt doesn't hurt your Loan chances except that it can lower your credit score. The mortgage people only care what the Minimum is that you HAVE to pay every month when they do their math to come up with a mortgage amount. However YOU need to know what you really owe since mortgage companies will generally approve you for far more than you can really afford.

I'd pay off at least 1 or 2 of those cards and get a new card with 0% on balance transfers and then transfer the balances from the other card(s) to the new card. That way you still have some left to put down on a house but you aren't getting finance charges any more.

 

[b0mbrman]

Originally posted by: sdifox

Originally posted by: b0mbrman

Originally posted by: sdifox

Originally posted by: b0mbrman

Originally posted by: dainthomas
If the choice is between:

1. pay off credit cards
2. buy (x)

Always choose 1. Especially in this case, because saving for a down payment is usually a losing strategy even WITHOUT credit cards.

I've got tens of thousands in credit card debt right now and today I bought x such that x was a bagel.

Also, I have cash--enough to pay off the credit cards--just sitting in my savings account.

You say always, but I don't think I'll be doing #1.

hahahaha, and your savings account is giving you a higher return than the CC interest charges?

5% is still greater than 0%, right?

Ha ha, indeed.

If you got a 0% APR CC card, yes, cashflow-wise it makes sense to leave the money in savings, however, it does negatively affect your credit rating. Fine and dandy if you are not buying a house like the op wanted to do.

That's certainly not always, now is it?

And it sounds like you're not laughing anymore. Glad I could shut you up.

 

[dullard]

Originally posted by: b0mbrman
And it sounds like you're not laughing anymore. Glad I could shut you up.

I hope you do realize you are probably paying a fortune in hidden costs. 5% of in a savings account is often pennies compared to the extra you may be paying in loans / mortage / and health, auto, and home insurance. Heck, it could even cost you a job/apartment that you wanted to have. Together those effects could be costing you thousands of dollars a year. I bet you aren't making thousands of dollars on 0% CC loans.

Even worse, what if you miss a payment by one day on any bill. Gasp at your 0% offers becoming 20%+.

Just because you can borrow at 0% and save at 5% doesn't mean you win financially.

Was "always" a good choice of words? No. But the point was still correct. Financially you are "virtually always" better off paying them off, even if you can get 0% CC loans. I'm sure you'll come back and claim that none of those factors affect you. But still, your situation is almost always bad financial advice.

One of several ATOT examples of the 0% CC money making fallacy.

 

[JS80]

Cash is KING

 

[PlasticJesus]

Originally posted by: 5to1baby1in5

...

Option #2 would be to default on the current loans, pocket the money, and sponge off your future wife's credit for the next 10 years.

I was kinda' thinking the same thing. Use what I would call the creditboards approach.

You paid off one card already, so you can't truly pull a creditboards scheme. Pay the minimum on those remaining cards until you get your house. At that time, you might convince yourself that you don't need credit again for at least another ten years or so. This being the case, there's no need to pay that remaining CC debt. Just ignore it. When your creditors give you a bad time, just get online and bad-mouth 'em and talk about what an injustice you're being done and talk about how you're gonna' sue somebody. By the time you need credit again, these creditors will have forgotten you and it won't be part of your credit history. There's nothing hard about any of this.

There are some good folks on that forum. There are plenty, though, that hold their debt and the non-payment of that debt as seemingly a point of pride. Some of those folks have problems that will give you headaches just reading about it.

This not actually directed personally. It's just heartbreaking what a lot of us have done to ourselves with this credit business. There has to come a time when you say that enough is enough and you pay this crap off and you buy only what you can afford right now. These companies are making too much money lending money and some of us are spending way too much to borrow that money.

If you're applying for cards and you're getting approved for something like 1500 bucks, then things aren't nearly as good for you as they could be. Surely you did your taxes here over the past few weeks. When you looked at your W-2 and saw your income for the year, did you ask yourself where the hell all that money went?

I really hope things work out for you. Seriously.



edit: left a word out

 

[deerslayer]

Pay off the cards.

 

[sdifox]

Originally posted by: b0mbrman

Originally posted by: sdifox

Originally posted by: b0mbrman

Originally posted by: sdifox

Originally posted by: b0mbrman

Originally posted by: dainthomas
If the choice is between:

1. pay off credit cards
2. buy (x)

Always choose 1. Especially in this case, because saving for a down payment is usually a losing strategy even WITHOUT credit cards.

I've got tens of thousands in credit card debt right now and today I bought x such that x was a bagel.

Also, I have cash--enough to pay off the credit cards--just sitting in my savings account.

You say always, but I don't think I'll be doing #1.

hahahaha, and your savings account is giving you a higher return than the CC interest charges?

5% is still greater than 0%, right?

Ha ha, indeed.

If you got a 0% APR CC card, yes, cashflow-wise it makes sense to leave the money in savings, however, it does negatively affect your credit rating. Fine and dandy if you are not buying a house like the op wanted to do.

That's certainly not always, now is it?

And it sounds like you're not laughing anymore. Glad I could shut you up.

Sigh, you choose to live this way, good luck to you. I just hope you don't get creamed by those wonderful folks at the CC comapny. I am sure they exist just for your financial wellness.

Actually, I think I am going to point and laugh.... hahahahaha