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Author: dianakalt Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308454  
Subject: Re: $5000 at 4.9% Date: 9/4/2003 9:06 PM
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So, I have a postition in a certain stock worth 10K right now from ESPP shares. I also have $5000 in credit card debt, on one card, with a $22,000 limit. I'm way above water on this in terms of income, and if I were disciplined about it I could pay it off in about 3 months.

I know that one of the tenets of Foolish investing is no credit card debt. However, I'm already in the market by virtue of my ESPP (employee stock purchase program) shares. I also set aside money for short-term savings and sweep it into my brokerage account periodically. At this point, I am considering diversification, and further Foolish investment. I figure the interest rate is low enough, I make fairly large payments and still have enough to save plenty. Is there anything wrong with this assessment? I know the numbers game with credit card interest. I NEVER pay minimums, and I'm "comfortable" dealing with this debt (it was planned) rather methodically.

Advice appreciated!


Chris, if you feel comfortable with just paying off the debt over the course of the next three months, and you are not over your head or in a bad cash flow situation, I think that your approach of stretching it out a little longer instead of liquidating your stocks is probably OK.

The one thing that I would make VERY sure you do is carefully inspect your overall portfolio and make sure you are not too heavily weighted in your company stock. ESPPs are very attractive, since they generally allow you to buy the company stock at a discount. However, it is easy to get loaded upon that company stock, especially if you have a 401k match that is also in company stock. Having both your paycheck AND a huge chunk of your portfolio all dependent upon one company comes dangerously close to having all your eggs in one basket.

I am personally not buying my company's stock via ESPP at this time. It was kind of a tough decision because my company is the leader in its industry and is doing pretty well. However, the vested company stock I have amounts to about 11% of my current net worth--and I'm only 40% vested. If I was fully vested, it would be even more.

A lot of Enron employees were wiped out, as I'm sure most folks here have said on the media. The ones who are worst off, and feel the furthest, are the folks who had almost all their retirement assets in Enron stock. Something to think about.
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