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Author: ClimbingOut One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308452  
Subject: Re: I'm a Newbie & I need advice on CC Debt Date: 10/17/2005 4:48 PM
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Well, this is definitely an interesting one. Sorry to hear about your life troubles. Just know that it's not always bad.

First, take a deep breath and relax. You are in debt, but it's not crushing because there is a way out. I commend you for not taking the BK route.

How close are you to selling the house? How realistic is that 60K? Since you are not over 55, if you do not invest that money back into another house within I believe a year you will pay capital gains, so don't forget to add that into the equation.

My advice would be to pay all the CCs off first. Right now a significant portion of your income looks to be tied up in payments. Payign those off instead of lowering the SL balance will allow you to have more flexibility in your cash flow, not to mention that they have significantly high rates and are in default/closed. Pay them off to start the clock ticking on them falling off your credit report.

Then, depending on how much capital gains you will need to budget for, put the amount equal to the captial gains tax into a high interest account like ING or Emigrant. Anything remaining put into another account as the start of an efund.

Build your efund up to at least 1K if it isn't there already.

THEN find ways to accelerate the paydown of the student loan. With a salary between 70K and 100K you should be able to afford a good paydown as well as your normal living expenses and retirement savings. You don't mention where you live or how much your basic expenses will be so I can only assume that. The main point is to free up as much of your monthly cash flow as possible so that you will be able to make choices. That is why I recommend paying to zero what you can instead of throwing it all at a high balance where you will still have all those monthly payments.
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