| Advice... 50 K credit card debt, making 85K per year |
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helpneeded2012us
First Time Poster
Cash: $ 0.25
Posts: 1
Joined: 03 Jun 2013
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| Advice... 50 K credit card debt, making 85K per year |
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Hi all,
I would like to get your opinion on how can I proceeded and plan my financial future with my current situation:
1. I have accumulated about 50 K debt in credit cards over the years. At about 20 % interest.
2. I recently got a new job. I’m self employed and I make about $1634.64 every week, which it adds up (52 weeks) to 85 K per year.
3. No TAX is taken out of this so I have to do my taxes at the end of the year….
What should I do ?
1. Pay off all my credit cards?
2. Put money in savings and pay credit cards
3. Put money in SEP IRA? (21,250 maximum allowed 85,000 x 0.25 )
4. Put half of the money in SEP IRA (21,250 / 2 = 10,625.00) and use the other half to pay credit card debt.
5. Put money in 401 K and pay credit cards
I also got a job delivering pizzas and I make about 500 every month.
I'm 33..
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Mon Jun 03, 2013 5:19 am |
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oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
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First I'd start a tax fund, your payroll tax will be about $13,000 and your income tax will be around $15,000. And depending on what state you live in, they may want some too - so set aside about $30,000 in a savings account.
With the other $55k, I would first check to see if the 401k has a 'match'. if so invest enough to get the 'match'. That is free money, you get an immediated 100% return on what you invest. So that beats the 20% that you are paying to borrow the money.
And then put everything else on the credit cards, 20% is brutal, the interest alone is costing $10,000/year.
But a couple years with your $90,000 income will clear out the CC debt plus give you a few 1000 in a 401k. Good luck.
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Mon Jun 03, 2013 1:29 pm |
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littleroc02us
Moderator
Cash: $ 384.35
Posts: 1891
Joined: 09 Feb 2009
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Without knowing your budget exactly to the tee, why not figure out a way to live on half of your income which would be around $2600 a month and apply the other $2600 to your credit card debt. 20% is ridiculous. My other concern is that your walking a tight rope and if your job situation ever changes your financial well being could be in jeapordy with so much debt. Stop contributing to your 401k and any other investments. Your only 33 and it will only take you around 20 months to pay off the debt so you'd only be 35. At that point once the debt is clear then lets say you invest $1000 a month and really work to put some money away which if you did this for 30 years you'd have 2.1 million at age 65 and half of that would be tax free.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Mon Jun 03, 2013 2:01 pm |
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Anton Martin
Full Member
Cash: $ 15.00
Posts: 73
Joined: 23 Nov 2012
Location: Florida, USA
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I would like to recommend you to put money in 401(k) and pay for your credit card first, as credit card interest is 20% it means that you are loosing lot of your hard earned money (Pay it on priority). As you are self employed get right information on 401(k) to contribute in it.
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Wed Jun 05, 2013 10:47 am |
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