| Exercising Options to Pay off Debt? |
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dhall123
First Time Poster
Cash: $ 0.25
Posts: 1
Joined: 27 Jul 2005
Location: Maryland
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| Exercising Options to Pay off Debt? |
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I work for a fortune 500 company and have on going options available to me. I've been with the company 7 years, and have options that are currently vested and vesting at various times between now and year end. I currently have one particular grant, that would leave with me 60K in proceeds, after taxes, if I choose to exercise now.
We are going to be building a second, eventual retirement home, in 2006. We are taking out a construction loan to so. We have over 100K in the land equity alone. My thoughts are to clean up my credit to potentially get a better interest rate and qualify for a 15 or 10 year loan vs. a 30 year. Currently I max out my 401K contributions, contribute to a Employee Stock purchase plan and invest an additional 1K per month in college funds and whole life policies.
I am considering exercising my options to pay off a Home Equity line of credit, 49K, and existing high interest credit card debt. My thoughts are that it would allow me to pay the money I'm currently paying to Home Equity & CC back to myself in the form of savings and building up a 3 month reserve. All though we invest in our retirements, I am cash poor with all the monthly debt going out. We do not have car payments, only a mortgage, Home equity, credit cards, and investments. (Only!) Is this wise to do? The land we purchased I did so by exercising options three years ago and it was a good thing.
What is a good form of savings that I can have easy access to in the event of life emergencies? CDs? Low Interest bank savings?
I'm also looking for books on helping me become more finacially savy.
Thanks,
Financially challenged!
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Wed Jul 27, 2005 3:40 pm |
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sayyes
Preferred Member
Cash: $ 11.60
Posts: 143
Joined: 02 Jul 2005
Location: Newport, RI
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Welcome dhall!
I admittedly don't know too much about the tax implications of cashing out your company stock options, but given your alternatives it sounds like you probably should.
I will say that your ABSOLUTE first priority (before the vacation home, retirement accounts, education savings, etc.) is to pay off your high interest credit cards! Once you stop paying 10% or more on those you'll be surprised how easy it is to save.
Once you accomplish that, I would stick your 3-6 months of savings into a money market account. I would avoid CDs if you're worried about taking that money out soon.
I suggest you take a look at my site to get an idea of how to reduce your debt and save your money.
I hope this helps!
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Wed Jul 27, 2005 6:05 pm |
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