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Need Personal Financial Advice

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BHFinancial
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Need Personal Financial Advice  Reply with quote  

Money Talk Forum:

I am in need of personal financial advice.

I have been building my savings for several years and have tried very hard to prevent making withdraws from it. However, it is becoming increasingly harder and harder to not do so with the credit card debt I have accumulated to pay bills, as well as a 5 year Discover loan I had to take for a family emergency.

My first thought was to pay a good portion toward my Discover loan balance to bring my monthly payments down. However, after talking with Discover, they told me that the type of loan I have will not bring my payment down no matter how much I paid into my balance. I thought about paying my balance over time to an amount I could afford to then pay completely off. However, I would still continue to have to make this enormous payment to Discover Loans each month, which is affecting my overall monthly bills.

My current thought is to take part of my savings and make a substantial payment to each of my five credit cards and bring their balances down, which will allow me to handle Discover Loan’s payment much easier. But I still would be stuck with having to pay this huge payment for the life of the loan.

So, my dilemma is to use my savings to payoff Discover Loans completely, which will severely hurt me financially, or to use it to pay my credit cards and continue to make my monthly loan payment. Because I cannot afford to pay them both.

So, which approach should I take?

Thank you,
Bryan
Post Tue Feb 07, 2017 11:10 pm
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oldguy
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It depends mainly on the credit card interest rates - an the amounts on loans.

It sounds like you may be borrowing money at 20% and keeping it in a 1/2% savings account? Got to reverse that.
Post Tue Feb 07, 2017 11:24 pm
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BHFinancial
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Thank you so much for your reply.

Yes, you are close. My loan is at 18% for 5 years. However, I do have low interest rates on my credit cards, one as low as 3%. Because believe it or not, I have an excellent credit rating, 830 at one time. And I would like to keep it that way. But it is becoming increasingly difficult to keep this tug of war going. I feel like I am being pulled in two directions with Discover Loan's payment and my credit card payments. But like I said before, I can only afford to pay either my loan off or my credit cards.

So, are you saying to just bite the bullet and pay off my Discover loan because of its high interest rate instead of paying my credit cards? What about paying down my Discover Loan balance and then paying it off? It's just going to really deplete my savings if I pay my loan completely off.

Thank you,
Bryan
Post Wed Feb 08, 2017 3:33 pm
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oldguy
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quote:
So, are you saying to just bite the bullet and pay off my Discover loan because of its high interest rate instead of paying my credit cards?


That's what I would do - right now you are paying 18% to borrow the money that is in savings and drawing only 1/2%.
Post Wed Feb 08, 2017 5:39 pm
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BHFinancial
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Thank you for your reply.

Okay, I will pay off Discover Loans from my savings, which I can then do a 0% balance transfer to pay my credit card balances as well. I think I just needed confirmation from someone in the finance field, such as yourself.

Thanks again,
Bryan
Post Wed Feb 08, 2017 7:19 pm
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Carmen W
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Your financial advices are really great and it is helping million people around the world. in such a short time period your website has become the biggest community. People joined live career reviews and interact with you in order to take professional advice. Good job!
Post Sun Jun 28, 2020 3:10 pm
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Darwin2018
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Post Sun Dec 20, 2020 9:05 pm
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mffaisbudgetapp
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Saving can reach your short, medium, and long-term financial goals like repaying your loan. But proper guidance on how to use savings is very crucial.
First, start by repaying the most expensive loan. In your case, it is a Discover loan. This will help you save money on interest in the future. Pay the highest amount you can afford toward the high-cost loan without risking your ability to repay the other loans. After you've paid off the most expensive loan, move on to the next one.
This approach is very beneficial and will make an addition to your financial well-being. Personal finance encompasses all areas of money management, as well as investing and saving.
Post Fri Feb 25, 2022 12:19 pm
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olbond
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avoid loans as a hell
Post Thu Mar 03, 2022 9:42 pm
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cregwillis
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quote:
Originally posted by olbond
avoid loans as a hell

That's only one opinion and probably you have your reasons to write that.
Me personally had few loans with one company Besteforbrukslån.no and at that time it was a business saving decisions. I returned everything on time and don't have any regrets. It all depends on the situation you are in.
Post Thu Mar 03, 2022 10:23 pm
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