15k advise

[Windward34]

Sorry if this question is off topic and basic but looking for some advise. Changing jobs and new opportunity comes with small sign on bonus 15k. I don’t have a lot of cash in hand but also have CC with similar balance. Assume smart move pay off CC ( after tax won’t cover all but close ) interest on card approx 13%. Pretty sure this is easy decision but wanted to see if I’m not seeing different options. I do have a boat loan owe 35k @6% about 5 years left, only other is house.

 

[38Chevy454]

I agree pay off the cc. It has highest interest rate. Then once that is paid off, concentrate on increasing payments on the boat loan.


Assuming you are or will be maxing out the 401k/403b contributions at your new job.

 

[Bryan Barnfellow]

This makes a lot of sense to me--pay off the CC debt.

-BB

 

[chassis]

+1 pay off the cc

 

[Windward34]

Yes maxing out 401k at current job and new. Does it make any sense to not max out at new just get full match short term to try and get ride of the 35k faster? I guess this is leading to bigger question should I roll 401 into new company both fidelity. (1.5m)

 

[Dash man]

Pay off the credit card and stop using it! The only thing that would make sense to use a credit card for is if you pay it off completely each month! You got yourself in pretty deep, so I’d suggest you avoid the temptation.

 

[tnbison]

You say you don't have much cash on hand. Do you have 3-6 months emergency fund or investments that are liquid enough to cash in if an emergency arises?

Interest rates suck right now but for me personally having a nice cash cushion helps me sleep well. YMMV

 

[travelover]

You say you don't have much cash on hand. Do you have 3-6 months emergency fund or investments that are liquid enough to cash in if an emergency arises?

Interest rates suck right now but for me personally having a nice cash cushion helps me sleep well. YMMV

+1.
Normally, I'd say pay off the credit card, but if you are running with no emergency fund, I'd at lest divert some of it to a cash reserve for emergencies.

 

[Windward34]

I do have emergency fund in 5-6 month range. The CC was being paid off in full monthly for years then one bigger purchase, then unexpected vet bills , and the normal monthly purchases compounded the debt. It’s amazing how fast it can happen and so hard to pay off.

 

[Sunset]

+1.
Normally, I'd say pay off the credit card, but if you are running with no emergency fund, I'd at lest divert some of it to a cash reserve for emergencies.

I still say pay off the credit card, and if some emergency comes up like furnace needs to be replaced. Then use the credit card to pay for it.


To continue paying 13% interest on the debt in order to hold some cash for an emergency that may not happen is a waste.

 

[Sunset]

I do have emergency fund in 5-6 month range. The CC was being paid off in full monthly for years then one bigger purchase, then unexpected vet bills , and the normal monthly purchases compounded the debt. It’s amazing how fast it can happen and so hard to pay off.

I'd use the signing bonus to pay off the credit card, and use a month or two of emergency money to pay the rest off.



Then over the next year or two rebuild the emergency fund.



You will have the credit card for emergency as well so it's not like you would be out of spending ability.

 

[CRLLS]

Definitely pay off the CC. I would also work on paying off the boat. To heck with the emergency fund. A CC will cover a real emergency for the short term. I always had the plan that my 401K or IRA could be tapped for a real emergency. I know, taxes and penalties are incurred. Knowing that helps one to separate the real emergencies from the myriad of other expenses that can be worked out in other ways. Fortunately, we never had an emergency like that.