I have 4 rentals bringing in $2000 month cash flow. Only debt is line credit at bank for $9500 at 12% interest. My husband had a new business do bad and we have 55k in credit card bills at 21% eating us alive. Should I use cash flow to pay off bank first and keep growing properties or should I hold off and pay down credit cards with that money and wait on growing 馃槥馃槩.
@April Robbins
I would not advise a refinance cash out. Yes the rate is lower but timeframe is a LOT longer to pay off. Buckle down, clean up the cards using a Dave Ramsey approach (smallest to largest). Give a year or whatever and keep the goal in mind all the time. You鈥檒l come back better prepared and stronger for your success. I wish you the very best!
@April Robbins Absolute no brainer, pay of the highest credit card debt! Maybe refi as $55,000 is a chunk to swallow but get that 21% interest gone forever!
April Robbins I'm assuming you don't have much of a cash cushion at all? Do you have enough equity in any one rental to sell it for enough to wipe out all your non mortgage debts and have an approx $20k cash cushion all said and done? If so, that's what I'd do.
I would also not start a business venture in the future that involved credit card debt to fund, even if you think it's a temporary but necessary evil. Quickest way to ruin everything you've built.
@Jason Powell
Definitely agree. I am in medicine so new to investing and finance. To use credit cards was not out intent to begin with. We just kinda had bad situations occur. He got licensed and started an insurance business. Which is commission. We could live off my income to do this. However I lost my job and it created a financial storm. We had all our savings put in these last 2 properties to get them rented out that just are finished this month. We really had to live off the CARDS until I got a great job and he finally took another part time job to supplement. Anyway we are back on our feet now but have definitely paid the price. I think our solution may be to refinance our house. We owe 270k appraised at 350k not sure how much we can get out of a refinance. I contacted our mortgage broker last week. That would take some pressure off and I could then quickly pay down the other loan so I can buy more properties. This sound good? Any companies you know that do good refinancing.
@April Robbins
I would not advise a refinance cash out. Yes the rate is lower but timeframe is a LOT longer to pay off. Buckle down, clean up the cards using a Dave Ramsey approach (smallest to largest). Give a year or whatever and keep the goal in mind all the time. You鈥檒l come back better prepared and stronger for your success. I wish you the very best!
@April Robbins
I do not agree with all of his teachings, but listen to Dave Ramsey. Moving unsecured debt to your house is a bad move. As previously suggested, selling a rental would be a better idea. Moving debt from one place to another is not getting rid of it.....trust me, I know from experience. Good luck!
@Matt Groth
The properties are all on family land and the home was my medical clinic at one time. I really don鈥檛 want to part with them as they have sentimental value.
@Bill F. What would numbers look like refinancing vs paying off the credit cards slowly as we can. Like 15 years at 4% on our interest mortgage vs 21% we pay now
do you want financial peace and stability in your life? A solid foundation from which to start growing wealth through RE? If so, the answer is not to pay origination fees (and I'm assuming raise your interest rate on existing mortgage) just to shift debt from one place to another. What rate are you at now on your home? I'm going to take a guess and say that if you refinanced, you'd pay the same amount of interest and fees in the next 12 months as you would if you attacked the credit card debt, maybe even more.
@April Robbins
You could also look into debt management companies such as greenpath. Not the best scenario, but they deal with your creditors, reducing the rates, and you will be paid off in 5 years or less. You still pay 100 percent of the debt, at reduced rates, sometimes 0 percent, and the accounts are closed. Your credit takes a bit of a hit, but will recover. Doing it on your own is better, if you can get it done quickly, but this is probably a better, cheaper option than rolling it into your house.
There are many credit cards that offer 0% APR for 6 months if you do a balance transfer. I have one that offers it through JetBlue Airlines, but there are many, I have done this several times. I think that they max out around $20,000, but definitely open one and transfer as much of your credit card debt over to it and then pay down as much as you can from the credit cards in that period. Once, the 6 months is up, transfer to another 0% APR until the credit card debt is gone. You're giving your hard work to a bank, better to keep it in your pocket.
@April Robbins Depends on your opportunities. If you can make more on a new deal than it costs for your credit card interest, definitely do the deal. Let the math decide.
@April Robbins. I would use all of the rental income and any other income that you have to pay off the credit cards ASAP. The interest is high. Hopefully you have both learned from this and will never go into that much credit card debt for a business. You can鈥檛 get ahead owing that much to a credit card company.
@April Robbins. I would use all of the rental income and any other income that you have to pay off the credit cards ASAP. The interest is high. Hopefully you have both learned from this and will never go into that much credit card debt for a business. You can鈥檛 get ahead owing that much to a credit card company.
@April Robbins I agree with some of the guys here about Dave Ramsey, The Total Money Makeover. I don't agree with all his teachings but I think his plans will help in your case. Pay minimum on all cards except one. Max payment on the smallest card till it's paid. Take all that money and apply it to the next and continue till they are all paid. In the meantime I'd keep looking for an amazing deal but if you don't come across an amazing deal then stick to the plan. This would leave you in a solid financial situation with cash flow coming in, less debt, and no CC payments.