I want to pay off my credit card debt once and for all. Is selling mutual funds the best strategy to do this?
I want to pay off my credit card debt once and for all. Is selling mutual funds the best strategy to do this? I am coming to terms with my credit card debt. This means calculating my total debt and creating a realistic payment plan that works with my income as well as discontinuing the use of my credit cards and opting to use my debit card for internet purchases instead.
I have three credit cards:
I opened the account for Credit Card 1 in 2001 and have a credit limit of $12,000; I currently owe $5,100 on that card. The interest rate is currently about 7%.
I opened the account for Credit Card 2 in 2006 and have a credit limit of $5,100; I currently owe $3,300 on that card. The interest rate is currently about 12%.
I opened the account for Credit Card 3 in 2007 and have a credit limit of $5,000; I currently owe $4,300 on that card. The interest rate is currently about 13%.
Both Card 2 and Card 3 were balance transfers from Card 1. Both had 0% interest rates initially and the transfers were made in the hopes of paying off the balances while not accruing interest on the amount owed. The problem is that I kept using Card 1.
I have always paid above the minimum on time and have no negative marks on any of my three credit reports. I am not sure what my FICO score currently is, but I do know that of $22,100 in total credit offered to me, I owe $12,700.
With my current income of I can afford to pay approx. $150 each to Cards 1 and 2 and $350 to $450 to Card 3 (in the interest of paying off the card earning the highest interest first) per month. I “give” myself $50 a week in cash to spend on whatever I want but once it is gone, it is gone. I live with my boyfriend and another roommate and we split costs for rent, utilities, apartment needs (toilet paper, etc.), two cats and groceries.
I have money in mutual funds totaling approximately $16,000 currently. It was invested to pay for my college education. I have already earned my BA and am looking to go back for my MA in the fall. I am considering selling the funds to pay off my debt and then reinvesting the money that I would normally pay toward my credit cards as well as setting some aside in a high interest savings account. This could be reapplied to my college education if I need. My conclusion is that financially it is a sounder decision to pay off most or all of my credit card debt now with money that is probably earning a lower interest rate than my cards are charging. I think that paying the interest on the cards over the next couple years would equal literally throwing money away.
I would love to hear thoughts of others who are financially wiser/more experienced than me on this matter! Thank you!
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