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Author: Bottles Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308782  
Subject: Re: Buying Stocks with my Credit Card? Date: 4/22/1998 6:05 PM
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Dominicus,

When I first read the subject of your post I was in shock at the thought of even considering buy stock on your credit cards... GASP!! How could you ever expect to beat the return of a 16% APR debt with any investment. It can be done, just not likely. After reading more carefully I understood what you asking. It seems your wondering weether to continue investing in your ESOP (Employer Stock Option Plan) at HP or cash in your current investment to pay off your credit card debt that much faster... (specifially 3 months or so).

That is always a hard question to answer. Ask yourself what your plan to do with the money in the ESOP. Is it for retirement, Education, perhaps a house? I think I would use the general rule of thumb about 401K's with company matching funds, which is Don't give up free money... To apply this to you It might mean keeping what you have for the minimum two years (That extra 33%).

The real question for you is should you continue investing in the ESOP of an extra $870/quarter or take that cash (it is after tax) and pay the cards off faster. Seems you have done some of the math to do the trade offs... That is something that only you can decide.

One thing you didnt mention was if you had any savings built up for an emergancy fund? I am in the process of building one for myself, but it is slow. I do have one investment in the market, a gift from my father, which I have not liquidated to pay off my CC debt. I am using that as and extreme emergancy reserve if ever needed - which I hope *Knock on my head* will never need. Right now I am putting away (trying to) $50-100/week to build up my emergancy fund in a savings account. If you really dont have that or at the 3 months living expenses guideline you might want to consider how I am doing it. Back off the ESOP for a bit, use what you have in there for emergancies only and start saving & Paying more off on your CC Debt.

Just a few suggestions and hope they help. Granted HP is a wonderful company, very reputable and respected. I use alot of HP Equiment where I work so I am rather familar with them.

Bottles

Rob

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