Credit Card is killing me

B

billyyard

Hi,

New to this forum but I have a problem and would welcome some feedback and hopefully no lectures.

I have 2 IP's

1. Val 380k borrowings 350k
2. Val 440k borrowing 295k

I also have a credit card debt of 63k..ouch:mad:

I work full time and earn around 86k p.a + super but the CC is killing me and cant get on top of it. I have only been in this job for 3 months.

As I see it my only two options are to (1) refinance IP 2 with some sort of split facility and pay off all credit cards then put my head down and try to reduce the split part of that loan or (2) sell investment property 2, pay off cards and start again. Down side here is that the market has headed south in that area and definitely not a good time to sell, would be lucky to get 440 even though a val a year agao was 460.

Its an aweful situation I know and I am losing sleep. Not sure the best way to go.

Any advice or thoughts on my situation?

Billy
 
Hi Billy,

Yep, must be awful. I have seen several people with higher credit card debts. One woman had $230,000. Several of them went bankrupt.

I would suggest you just bite the bullet and sell IP 2. Do it quick as these things can snowball.

Once you have cash in your hand then ring up the credit card company and say you cannot keep paying the high interest and want to make an offer to pay out the cards. I have helped people do this and had to pay from 30 to 50% of the outstanding balance.
 
Hi Billy,

I can see why it's hard to get on top of your c.c. debt :( the interest alone from month to month must be around the $1k mark.... so you have to cover that before you can start repaying the principal back. :(

I would sell IP2 ASAP.........
So you definitely don't have any spare cash in an offset account or anything? Sell a car etc?

Out of curiosity how did you manage to amass a c.c debt of $68k?? Do you have multiple cards? The limits must be quite high on each?
 
Hi Tess and Terry,

The debt has accumulated over several years, is over several cards and has accrued for a variety of reasons most of it property related some renos etc.
Its a crap situation. You both think it best to bite the bullet and sell rather than refinance?

Billy
 
Hil billyyard - you might be able to consolidate your debts to pay off the CC. But I'd need more information before I could work it out like rental income, do you have a ppor, married? kids? etc
 
Sell - you'll be in a much better "reset" position, and you'll feel a lot better too.

It's never a good time to sell - but you need to.



The Y-man
 
1. check if you can refinance first with that sort of debt, i doubt you will benefit much from any refinance given the size of the cc; as you be force to go to non-conforming lenders and rate will start at 8% not just for the refinanced CC debt; but your home loans as well... it 's sort of "pushing" the problem aside and extending the life of the problem.

Ill say bite the bullet and sell; it's hard to predict when the market will pick up, ...you may be waiting for a while and in the mean time suffering from this cc debt.
Say the market is at $440k and if you did wait another 1 year it may go to $460k yes that's a 20k difference but the amount of interest you be paying + lost of sleep -- is it worth it??i think not.

Regards
Michael
 
Last edited:
Well consolidating a CC debt turns it from a 25% p.a. personal loan into a home loan @ 7% payable over 30 years....so it's better if you have the financial discipline to pay it off ASAP.
 
if he can get the 7% rate :eek:

Need to know another financial to work it out, but im presuming worst case scenario :rolleyes:

Regards
Michael
 
Aaron_C said:
Well consolidating a CC debt turns it from a 25% p.a. personal loan into a home loan @ 7% payable over 30 years....so it's better if you have the financial discipline to pay it off ASAP.
Click to expand...

I'm inclined to suggest selling.

Credit card debt of this size tends to suggest that the OP doesn't really have the discipline to get the extra payments made so resetting the credit cards to a 30 year term and then paying them off over the next 3-5 years.

Selling a property, getting rid of the credit cards and making a commitment never to use another credit card again is probably going to have a better long term result.
 
Thanks all for your replys and thoughts. It helps just to get it out there and get some other opinions. I am leaning towards selling I think. The grief associated with this is not worth it I think.

Michael C what was the other financial you were enquiring about?

Billy
 
Pretty much what Arron posted earlier.

Aaron_C said:
Hil billyyard - you might be able to consolidate your debts to pay off the CC. But I'd need more information before I could work it out like rental income, do you have a ppor, married? kids? etc
Click to expand...

1, PPOR? renting or mortgage as well? how much rent or mortgage per month? If mortgage PPOR financial break down in val and debt remaining
2. Married? kids ..how many
3. Another debt- personal, car loan? amount and min monthly repayment?
4. Rental income amount?
5. What the monthly payment on each of the IP?
6. Do you have a active CR file? ie how many credit card, loans, phone and credit product have you applied for in the last 6 and 12 mnth?
7. Looking at your bank statement; have you had an overdraw or default in the last 6 month?
8. Any miss payment on any of the mortgage?

Regards
Michael
 
Hi Aaron C.

IP 2 is essentially my PPOR but I rented it out a little while back to try and get on top of things but still not getting anywahere in real terms.

The rent from 2 properties:

1. 370 pw
2. 470 pw

Not married, no kiddies

Billy
 
Well Billy you might be able to do a refinance if your credit history is clean and you agree to cancel your credit cards as soon as they are paid off.

Ultimately the decision is up to you - but either way you have to do something quickly. Just keep in mind, if you used the credit cards to renovate your IPs make sure you claim some interest you've been paying as a tax deduction. This might help your cashflow significantly.
 
Is it worth refinancing on a "transfer balance 0 interest for 1 year card'?
Buy a year of breathing space to pay down as much as possible.
 
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