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Author: mlkjifg Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308484  
Subject: Was I wrong to pay it all off? Date: 1/27/2000 12:54 AM
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I'm new to Fooldom and have been learning a lot, reading the books and all around the site here... so please be patient with me.

About 3 weeks ago I sold my house, making about $70K profit (sold for $205K; mortgage was $120K, then brokers fees, etc) This was great, because prior to this year, each time I explored selling the property,I would have taken a loss. The house was too much for me to handle physically, emotionally and financially. Over the five years since my divorce I'd got deeper and deeper into debt -- finally about $15K, all credit card debt plus a personal no-interestloan my dad had given me for tuition downpayment several years ago, of $1,750.

So, when I got an apartment, my living expenses are now 2/3 of what they were previously. The first thing I did was pay off all my debt, because I wanted that exhilerating feeling of freedom -- but perhaps I was too hasty? I'm doubting myself and if there is something to learn from this for the future, I'm willing to examine it.

I paid off the credit cards; they had introductory balances of 6.9% and 3.9%; that was super because keeping track of their turnover dates was a pain. But I also paid off the one that was 4.9% for as long as the payments continued (balance of $5,000). I've been reading Motley Fools books and getting educated on how to better manage my money. Wouldn't I have been better off keeping that low percentage rate and paying it, rather than having paid all of the cards off?

Currently I am 45 years old woman, single, earn about $35,000 a year; no longer have a house, have an '86 Toyota Camry that I LOVE and runs great but the body is really getting embarrassingly trashy (I'll probably replace it with a used car after the winter).

My IRAs are:
Retirement CD in a bank that comes due in October; that will be $12K to invest in an equity Index at the least; with what I'm learning, most likely in stocks. I've started tracking small cap growth stocks.

401Ks with a previous employer in some Fidelity Funds (I know I can do better with this $39K)

$15,500 in some Putnam funds with a full-service broker (ugh,.. but atleast they are profitable); these are ROth IRAS.

I have $4000 ready to put into Roth IRAs for '99 and '00, but have not yet decided where they're going.

And I have $50,000 that's sitting in a 6% account; that I want to keep as liquid as possible. ... It could have been $70,000. (In the meantime, I'm getting on over to the allocating boards and getting a plan in place.)

But before I shift my focus, I'd like to get clearer on what I just did. Would you have handled it differently and had $70,000 to invest rather than $50?




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