Be responsible or not?

[Butter]

So, I am looking at about a $4,500 tax refund come February, it appears. I know, I shouldn't give the government an interest-free loan, etc. etc. But that's not important to my question.

I have about $4,500 in credit card debt right now. I could just pay that off and be rid of that burden. Honestly, it's not paining me to make the payments right now, but paying interest on the cards is obviously not the best way to go because you're just giving money away (much like I'm doing with the government, yeah yeah, I do get it).

OR

I want to take a trip to Disney World in March with part of the money. Looking at the packages online, it would cost us about half of the money to take a 5 night trip to WDW in March, while leaving the remainder to pay off 2 of the 3 credit card bills. My kids are 6 and 4 (they'll be close to 7 and 5 in March), and I think this would be the absolute prime time to go to WDW. We did just go 2 years ago, but my youngest was only 2 1/2 at the time, and really didn't enjoy and couldn't remember that much. But now, I think they would love all of the rides (except the big thrill ones), and it would just be a magic moment for them and for us as a family. Plus, my wife and I both love going, this would be our 3rd time as a couple (we honeymooned there).

However, my wife wants to be responsible and just pay off the debt. That would probably be the best thing to do with the money, but if we don't go to WDW this year, then we probably won't go for at least 3-4 more years, as my wife is due to start full time nursing school in the fall, and we have to start saving for that, and any tax refunds will be used for home improvement/bill paying for sure as her income will be non-existent while she's in school (she babysits for extra cash now). But I fear that in another 4 years, Disney just won't be as fun for the kids any more because they'll be too old for it (pre-teens), and too jaded.

So, I open it up to the floor. Disney this year or not? Be responsible or have some fun?

[wade moore]

What's the interest rate on the card?

[RedKingGold]

1/2 and 1/2. That way, you are being responsible and having fun. Not being responsible would be blowing the entire wad on something stupid (like a 20-foot statue of Mike Tyson)

[Lorena]

However, my wife wants to be responsible and just pay off the debt. That would probably be the best thing to do with the money, but if we don't go to WDW this year, then we probably won't go for at least 3-4 more years, as my wife is due to start full time nursing school in the fall, and we have to start saving for that, and any tax refunds will be used for home improvement/bill paying for sure as her income will be non-existent while she's in school (she babysits for extra cash now). But I fear that in another 4 years, Disney just won't be as fun for the kids any more because they'll be too old for it (pre-teens), and too jaded.

I agree with your wife, get rid of the credit cards they're such a burden. Once you pay your credit card debt the interest you would have paid could be saved for a trip in the future.

You guys seemed to have enjoyed Disney during your honeymoon so I don't see how your kids wouldn't enjoy it as they get older.

[Ksyrup]

Pay down the CC some, make sure you have the rest on a no-interest introductory rate card, and use the rest of the refund for your family.

[Raiders Army]

I'd pay off your credit card debt completely. Credit card companies want the payments to be "reasonable" so you won't pay off your debt. If you don't want to do that, you've already been to Disney World so why not try something cheaper that's different? It's probable that Disney World will always be there, so go back in another 2-3 years when it's changed more.

[Ksyrup]

It's probable that Disney World will always be there, so go back in another 2-3 years when it's changed more.


I'm happy to report that as of a couple of years ago, the Epcot exhibit exploring future technologies had finally changed the "one day we'll talk on phones without chords" and "people will actually be able to cook food in magic boxes instead of on a stove" presentations.

[JonInMiddleGA]

If you hadn't mentioned it would be another 4 years or so before you're likely to have the time to go to WDW, I might have been more in the middle on this, but with that & the ages of your kids in mind, I'd have to say 1/2 on WDW.
You're very much right about this being "prime time" for the kids to enjoy it.

If the card debt (and monthly payments) are seriously hampering your day-to-day quality of life then you probably have to go ahead & deal with them instead, but if not, then this is one of those cases where I think the "What are you waiting for? You nor the kids are getting any younger, so why put it off?" thing applies.

They're only gonna be 5 & 7 once, and this is one of those things that you'll all remember for the rest of your lives.

[stevew]

Pay off the cards completely, re-direct the 130-200ish a month you are currently paying in payments into a savings account for your next trip. Also when your utilization goes down on the cards you have, it should give your score a bit of a boost and enable you to get better cards, perhaps even ones with better rewards perks.

[bulletsponge]

Butter i know a cheap way you can splurge, i heard you can get Ohio State National Championship shirts real cheap now! think of the savings!

[stevew]

Oh, and whatever you do, don't cancel those cards even though they are paid off. Just use them sporadically in the future.

[KevinNU7]

Set up a savings account with no minimum requirements that has no fees of any kinds and no limiations on how when to withdraw. If you can get one with some interest too even better.

Then pay off your credit card. Figure out how much you paid to that credit card in November, and how much you paid in December. If it was $100 a month or whatever.

Then take that average monthly payment amount and request your company to do a direct deposit into your new savings account every month for that amount.

Then ignore that account for a while. This time next year you maybe able to go on that Disney trip again with money you had completely forgotten about.

[KevinNU7]

Dola, the above post is what I am in the process of doing. I pay $500 a month to CC (Financed our wedding and then had a baby and had to finance diapers... ugh). Anyways we are about 6-10 months away from debt free and if my wife gets a patent attorney job soon it will be even quicker. The key though is that when we are done I am not going to let that $500 a month sit in my checking account as money to blow away I am going to increase my car payments, or set up a college fund, or increase my 401k contributions.

[Emiliano]

I'd say pay your debt first. You'll feel better.

[Ksyrup]

I think people are missing the part about how this would be the last chance for 3-4 years to take a trip of this nature. I think that significantly changes the equation. Saving for a trip is a great idea, unless you're planning on 2010-11.

[KevinNU7]

Oh, and whatever you do, don't cancel those cards even though they are paid off. Just use them sporadically in the future.
Well if you are not in a position to need your credit for the next 2 years it is sometimes best to cancel cards. To many cards lowers your score. So if you already have a home and cars and don't plan on doing any major credit transactions for a few years it would be a good time to condense down to 2-3 credit cards.

And something that you can do that will not hurt your score is requesting that the credit limit on your card be reduced, which on your report shows that you have less debt risk (i.e. if you fill up your cards you will only be $1,000 in debt rather then $20,000) which is also factored in to some credit scoring.

[KevinNU7]

I think people are missing the part about how this would be the last chance for 3-4 years to take a trip of this nature. I think that significantly changes the equation. Saving for a trip is a great idea, unless you're planning on 2010-11.
His wife will not be going to school all year long. I am sure they would get the oppurtuntity to go again relatively soon. I went to Disney the day after Christmas for a week and it was pretty empty everywhere, the weather was fairly cool and from what my parents told me they got a great deal. So that option I'm sure would be available to him.

[stevew]

Well if you are not in a position to need your credit for the next 2 years it is sometimes best to cancel cards. To many cards lowers your score. So if you already have a home and cars and don't plan on doing any major credit transactions for a few years it would be a good time to condense down to 2-3 credit cards.

And something that you can do that will not hurt your score is requesting that the credit limit on your card be reduced, which on your report shows that you have less debt risk (i.e. if you fill up your cards you will only be $1,000 in debt rather then $20,000) which is also factored in to some credit scoring.

The more I read, I'm not so sure that too many cards is as big of a factor as people make it out to be. Utilization and payment history(both length of history, and promptness of payment) seem to be much higher weighted factors....for instance if he paid on these cards for, say, 5 years or more, throwing away a good payment history would not be beneficial in the long run.

[spleen1015]

I would go to WDW and use the rest to pay off debt.

[KevinNU7]

The more I read, I'm not so sure that too many cards is as big of a factor as people make it out to be. Utilization and payment history(both length of history, and promptness of payment) seem to be much higher weighted factors....for instance if he paid on these cards for, say, 5 years or more, throwing away a good payment history would not be beneficial in the long run.
I totally agree. I was however addressing you "whatever you do, don't cancel those cards even though they are paid off. Just use them sporadically in the future." Which is not always the right statement. I think having 7 cards of $5,000+ limits is not going to look that great even if you have add each one for 5+ years. Debt risk is definetly a factor taken into play.

Personally I'd like to have one card with $5,000 and the rest gone so I will set most of those to $1,000 or less until I feel I can close some of them.

[Subby]

When you get carjacked and shot in the face this fall, will you be glad you used that money to pay off debt?

[stevew]

When you get carjacked and shot in the face this fall, will you be glad you used that money to pay off debt?

I didn't realize he was planning on going to the Bengals training camp?

[Ksyrup]

When you get carjacked and shot in the face this fall, will you be glad you used that money to pay off debt?

I hear it was a down year for being shot in the face in Orlando in 2006. Good times are headed your way!

[lordscarlet]

Set up a savings account with no minimum requirements that has no fees of any kinds and no limiations on how when to withdraw. If you can get one with some interest too even better.

Then pay off your credit card. Figure out how much you paid to that credit card in November, and how much you paid in December. If it was $100 a month or whatever.

Then take that average monthly payment amount and request your company to do a direct deposit into your new savings account every month for that amount.

Then ignore that account for a while. This time next year you maybe able to go on that Disney trip again with money you had completely forgotten about.

3% interest rate and no minimum balance for ING Checking.

[Logan]

Go to WDW for the kids. Sounds like they'll love it (and yes, that makes this a responsible decision too).

You'll still be able to pay off a nice chunk of your debt. Have you looked into any balance transfer options so that you could lower your rates on whatever debt is left over?

[Toddzilla]

http://www.port.hu/picture/instance_2/75584_2.jpg
Two chicks at once

[Drake]

Pay off your credit card debt, then use the credit cards to go to Disney. It's teh win-win. :D

[Ksyrup]

Being debt-free is overrated. Seriously. Having manageable debt allows you to do many things you might not otherwise be able to do. I don't know anything about your finances, of course, but shaving, say, $1500-2000 off of $5K in debt would leave a very manageable amount of debt. You need to have it on the right type of card and make sure you are in a position to pay more than the minimum, but I don't see how you don't treat the kids to Disney with part of the money.

[KevinNU7]

Pay off your credit card debt, then use the credit cards to go to Disney. It's teh win-win. :D
This is actually not a bad idea if done correctly. :cool:

We already know he has his debt on 3 credit cards. So let's assume that his debt is $1,500 on each card. Let's assume that the rates are not all the same.

If he were to pay off all his credit cards and then put the vacation all on the one credit card with the best interest (assuming he has a high enough limit) then he would in a sense be reducing his monthly interest costs. This would reduce his minimum payment but if he continued to pay the same amount of money he did in Nov/Dec he would be putting more money towards principal and would gt out of debt even faster.

[lordscarlet]

Being debt-free is overrated. Seriously. Having manageable debt allows you to do many things you might not otherwise be able to do. I don't know anything about your finances, of course, but shaving, say, $1500-2000 off of $5K in debt would leave a very manageable amount of debt. You need to have it on the right type of card and make sure you are in a position to pay more than the minimum, but I don't see how you don't treat the kids to Disney with part of the money.

Um. Overrated? Were he to pay it off, and not charge anything over the next year he would presumably save at least $500 (15% APY) over the next year. In addition, I don't know what the situation was this year to get $4500 back, but if it was a typical year, then there will be another $4500 next year. That gives $5000 (not counting interest on the $500 that was saved up over the year) to take your kids to Disney next year at 8 and 6 and you have the credit card on hand in case an emergency occurs while you are in Disney.

[Radii]

If you hadn't mentioned it would be another 4 years or so before you're likely to have the time to go to WDW, I might have been more in the middle on this, but with that & the ages of your kids in mind, I'd have to say 1/2 on WDW.
You're very much right about this being "prime time" for the kids to enjoy it.

If the card debt (and monthly payments) are seriously hampering your day-to-day quality of life then you probably have to go ahead & deal with them instead, but if not, then this is one of those cases where I think the "What are you waiting for? You nor the kids are getting any younger, so why put it off?" thing applies.

They're only gonna be 5 & 7 once, and this is one of those things that you'll all remember for the rest of your lives.


I agree with this completely. $4,500 is not a large amount of credit card debt, unless you're both making minimum wage. It doesn't sound like you're financially irresponsible or anything. If you had $30,000 in debt maybe it'd be different, or you had a history of blowing *all* extra money that came your way, or you'd made promises to yourselves to pay down your debt repeatedly and failed, or one of the million other traps that people fall into playing psychological games with themselves with their money.

I would go to disneyworld, put the rest of the money you don't use on the trip towards debt(set limits for yourselves on the trip and use the rest for debt BEFORE you go so you're not tempted to go way over), and commit to paying more than the minimum payments on your credit cards until they're paid off, if you aren't already doing that.

[Logan]

Um. Overrated? Were he to pay it off, and not charge anything over the next year he would presumably save at least $500 (15% APY) over the next year. In addition, I don't know what the situation was this year to get $4500 back, but if it was a typical year, then there will be another $4500 next year. That gives $5000 (not counting interest on the $500 that was saved up over the year) to take your kids to Disney next year at 8 and 6 and you have the credit card on hand in case an emergency occurs while you are in Disney.

And if he goes to Disney and pays off half his debt, he'd save at least $250 over the next year.

Knowing that I could take my kids on a trip this year, and not having to worry about what happens next year (new fridge/oven/roof/whatever) that could possibly not make the trip happen, would be worth $250 to me.

[Ksyrup]

Um. Overrated? Were he to pay it off, and not charge anything over the next year he would presumably save at least $500 (15% APY) over the next year. In addition, I don't know what the situation was this year to get $4500 back, but if it was a typical year, then there will be another $4500 next year. That gives $5000 (not counting interest on the $500 that was saved up over the year) to take your kids to Disney next year at 8 and 6 and you have the credit card on hand in case an emergency occurs while you are in Disney.

I am presuming that he pays no interest on his credit cards. Maybe my credit is exceedingly great by comparison to everyone else's, but I doubt it. And I get 8-10 "no interest" CC offers a week and have not paid interest on my CC balances since before law school. Every cent I put toward my CC balances goes to pay down the principal. So, even if it takes me 5 years to pay off, say, $10K as it would if I tried to pay it all off, with interest, in a 1 or 2 years, I'm saving money doing it in a more economical manner.

[wade moore]

I am presuming that he pays no interest on his credit cards. Maybe my credit is exceedingly great by comparison to everyone else's, but I doubt it. And I get 8-10 "no interest" CC offers a week and have not paid interest on my CC balances since before law school. Every cent I put toward my CC balances goes to pay down the principal. So, even if it takes me 5 years to pay off, say, $10K as it would if I tried to pay it all off, with interest, in a 1 or 2 years, I'm saving money doing it in a more economical manner.

I'm pretty confidant you're very unique in this situation.

[AgustusM]

go to DW

you can not put a price on spending time, especially time they will never forget with your kids

when you are on your death bed which would you rather have:

* the memory
* a good credit score

Some of this reminds me of the book "The Millionaire Next Store" In a nutshell that book recommends you don't spend money on anything - drink Folgers coffee with reused grounds instead of Starbucks, take the bus instead of owning a car, buy clothes at good will, etc. What the hell good is it to be a millionaire if you are going to live like you are poor?

PS - BTW my credit score is over 800 and we have a lot more debt then you do - the reason is I read about 10 books on Credit Scores after my wifes dropped 20 points on a $50 medical bill - that we NEVER GOT! Once I learned how to manipulate our credit scores they have both been in the high 700, low 800s ever since.

[lordscarlet]

I am presuming that he pays no interest on his credit cards. Maybe my credit is exceedingly great by comparison to everyone else's, but I doubt it. And I get 8-10 "no interest" CC offers a week and have not paid interest on my CC balances since before law school. Every cent I put toward my CC balances goes to pay down the principal. So, even if it takes me 5 years to pay off, say, $10K as it would if I tried to pay it all off, with interest, in a 1 or 2 years, I'm saving money doing it in a more economical manner.

I think that's a hell of an assumption. I would certainly assume he has anywhere from 5-20% interest on every single card. I know of no card that is 0% interest for more than a year. And most people don't keep flipping balances.

[wade moore]

In fact I'd add - that's a HUGE assumption.. if this was what most people did (which it would have to be for you to assume) why would credit card companies be in business?

[BrianD]

How long would it take to pay off the debt if you did go to Disney? If this is something that could be paid off relatively quickly (6 months), I would say go to Disney. If this is something that will take years to pay off, or would take forever due to making only minimum payments, then pay off the debt.

Debt is not such a bad thing if it can be managed and brought back to zero easily enough. Any time you are stuck and able to only make minimum payments, you need to do whatever you can to eliminate the debt.

Does anyone know the credit rating ramifications to constantly rotating among no interest credit cards? This seems like a bit of a hassle, but possibly a nice way to keep the interest away.

[Ksyrup]

I think that's a hell of an assumption. I would certainly assume he has anywhere from 5-20% interest on every single card. I know of no card that is 0% interest for more than a year. And most people don't keep flipping balances.

I have had 5 in the past 2 years or so, and all are/were 12-18 month 0% intro rates. And that doesn't account for the scores of offers I've thrown away, or the 24-36 month 0% rates I've gotten with Dell, Best Buy, Sleep Outfitters, etc., at specific stores. I'm paying all of my accounts down and not spending a cent on interest. And flipping the balances is pretty simple - all you have to do is keep track of the terms on a spreadsheet (or whatever method works for you) and consolidate expiring card balances onto the next card. Right now, I've got 3 open CCs with 2 expiring in May, and I'll be combining those onto 1 card in April.

[BrianD]

go to DW

you can not put a price on spending time, especially time they will never forget with your kids

when you are on your death bed which would you rather have:

* the memory
* a good credit score


There are lots of ways to spend time with the kids that are less expensive. You also don't want to mortgage your future for one trip right now. This isn't about a credit score, it is about managing debt. If that can be done with a Disney trip, then go on the trip.

[Ksyrup]

In fact I'd add - that's a HUGE assumption.. if this was what most people did (which it would have to be for you to assume) why would credit card companies be in business?

Why be one of "them?" Let other people justify the CC companies' business model.

[Logan]

Does anyone know the credit rating ramifications to constantly rotating among no interest credit cards? This seems like a bit of a hassle, but possibly a nice way to keep the interest away.

Well, lenders will be hesitant to give you money, since they're not going to make any off of you.

[JonInMiddleGA]

... and have not paid interest on my CC balances since before law school.

Would you care to adopt a family of three in Georgia?

Every cent I put toward my CC balances goes to pay down the principal.


We're pretty much there now, but it's taken 12 years to get there.

[Ksyrup]

Does anyone know the credit rating ramifications to constantly rotating among no interest credit cards? This seems like a bit of a hassle, but possibly a nice way to keep the interest away.

I don't know what the ramifications are, but I know that my credit has not been negatively impacted. I've heard that it can be a negative, but I haven't seen it. I've never had an issue with CCs, car loans, mortgages, nothing.

[Ksyrup]

Well, lenders will be hesitant to give you money, since they're not going to make any off of you.

I just opened a new card with a company I've had before, and they even gave me me old CC number back. I thought it looked familiar, and sure enough...

[Toddzilla]

Do this.....

(1) Get a credit card that gives you frequent flier miles. You should get a bunch of miles for opening the account.
(2) Transfer all of your existing debt to the new card. You should get even more miles for that.
(3) Pay off that debt with your tax refund.
(4) Use the new card to charge your entire vacation

You should end up with an assload of miles on it, probably enough for free tickets and whatnot.

[wade moore]

Why be one of "them?" Let other people justify the CC companies' business model.

I'm not saying it's not a good idea - I've done pretty much this for myself..

But I think it's a huge assumption to make that Butter is doing this, as most people are not.

That's all..

[Ksyrup]

Do this.....

(1) Get a credit card that gives you frequent flier miles. You should get a bunch of miles for opening the account.
(2) Transfer all of your existing debt to the new card. You should get even more miles for that.
(3) Pay off that debt with your tax refund.
(4) Use the new card to charge your entire vacation

You should end up with an assload of miles on it, probably enough for free tickets and whatnot.


Most cards will not give you points/miles, etc., for the transferred balance.

[JonInMiddleGA]

I know this is beyond the scope of what this poll/thread were looking to accomplish, but y'know what would be interesting? If the responses were broken down between advice from parents vs non-parents.

[Ksyrup]

Not to make this a complete threadjack detailing my CC usage, but the other side of how I use CCs, for everyday purchases, is another whole thing. Pretty much everything we buy goes on a Delta Miles AE card that gets paid off every month. I also have MC for the same purpose that we only use where AE is not accepted. You have to make sure you know what is a "daily living expense" and what is not, but once you've mastered that, you can just cash in on the miles. Right now, I've got 133K miles racked up. And again, not a cent of interest paid, and it's as easy as using your debit card or checks/cash, but with great benefits.

I've seen a couple of banks now tying their debit cards to airline miles, so I'm sure I'm not the alone with figuring out this scheme.

Bank cards are my friend. :)

[BrianD]

I know this is beyond the scope of what this poll/thread were looking to accomplish, but y'know what would be interesting? If the responses were broken down between advice from parents vs non-parents.

I would imagine that non-parents (like me) are pushing for the debt reduction. A Disney vacation is a great thing (my wife and I are going next week), but not enough to mortgage your future over. I'm a big proponent of getting out of debt now and then enjoying life.

[King of New York]

Paying off credit card debt makes sense, if you have the willpower and financial means to keep it off. I've known so many people who had windfalls, paid their credit cards down to zero, and within six months went straight back to carrying the same balances that they had carried before the windfall--which is to say, the maximum that they could sustain.

[Marc Vaughan]

Move the debt into a sensible place (either an interest free period on a new card or a loan) and do both imho ...

Your kids are at the age when they'll appreciate the trip and non-sensible as it might seem there are some things which are worth more than money imho, build some memories for them to look back on when they're older ...

(I'd much prefer my kids to remember their childhood with me as as fun rather than think 'well he was a frugal person' ..... ;) )

[Butter]

Thanks for all the suggestions.

The credit cards are all around 10% interest, I believe one is 8.9% and the others are 9.9%. I do not have STELLAR credit, but it's decent enough. I don't do the rotating cards thing, although it is a fine idea.

Unfortunately I'm in training all day, so my responses will be kinda limited until tonight.

[Butter]

Butter i know a cheap way you can splurge, i heard you can get Ohio State National Championship shirts real cheap now! think of the savings!


I was actually wondering last night what they'll do with all those shirts they printed up.

[wade moore]

Thanks for all the suggestions.

The credit cards are all around 10% interest, I believe one is 8.9% and the others are 9.9%. I do not have STELLAR credit, but it's decent enough. I don't do the rotating cards thing, although it is a fine idea.

Unfortunately I'm in training all day, so my responses will be kinda limited until tonight.

I would recommend that perhaps this sparks you to look for/keep an eye out for a card that gives you 0% interest on transfers for 12-18 months? Then you take the trip and dedicate to paying the principle on your cards for the next 12-18 months?

[JonInMiddleGA]

I would recommend that perhaps this sparks you to look for/keep an eye out for a card that gives you 0% interest on transfers for 12-18 months? Then you take the trip and dedicate to paying the principle on your cards for the next 12-18 months?

Just to extend that thought even further (I have no idea what their transfer policy is): We recently got a Disney Visa, which does like 1% (or maybe it's 3%) cashback type deal that's redeemable at ... you guessed it ... WDW/DL.

If you took your idea & combined it with a card like that, it'd also pay for the next trip to Orlando a few years down the road.

[Ksyrup]

There are a bunch of 0% interest for 12 month CCs at creditcard.com. When transferring balances, the one thing I absolutely refuse to do is pay the 3% (or $50-75 limit) transfer fee. The cards that don't charge a fee are few and far between, but I search them out.

Right now, I've got a bit more CC debt than I want to have, but about 90% of it is directly attributable to 2 things: our move, and my weight loss (new clothes). And, when I got my law school loan debt down to around $15K, I found a CC that didn't limit balance transfers to other CCs (they took education loans, car loans, etc.), so I transferred the remaining law school loan principal to a 0% interest card as well. That was HUGE for me, since it potentially saved thousands of dollars in interest. I think at the time I did the transfer, I was still paying about 75% of my monthly payment to interest. Now it's zero, and even if it takes me longer to pay it off, I know I have not "wasted" any money in the process.

[Mustang]

Pay off your debt and use the money leftover on your kids to take smaller trips throughout the entire year. DW is overrated anyways..

[wade moore]

Threadjack: This sparked me to check my credit report.

I'm baffled as to why having now owned a house for two years and having no delinquent payments in that time my score has gone down slightly from just before I bought my house.

[Mustang]

I'm baffled as to why having now owned a house for two years and having no delinquent payments in that time my score has gone down slightly from just before I bought my house.

Has your available credit gone up? I believe that negatively affects your credit score.

[wade moore]

Has your available credit gone up? I believe that negatively affects your credit score.

I think this is exactly it... I financed an engagement ring (only about $1500, but it technically gives me an account with like 8,500 available), a bigger CC (about 6500 limit, but only like 300 balance when I used to have a max 2500 limit)... and then of course the house..

That's all I can think of... I've had the same car the whole time, so that loan has gone down.. my Student Loans have done nothing but decrease...

Basically, my actual debt has gone down outside of the house itself, but yeah, I think my available credit has gone up,.

[JonInMiddleGA]

DW is overrated anyways..

Not if you do it right ;)

[KevinNU7]

I think this is exactly it... I financed an engagement ring (only about $1500, but it technically gives me an account with like 8,500 available), a bigger CC (about 6500 limit, but only like 300 balance when I used to have a max 2500 limit)... and then of course the house..

That's all I can think of... I've had the same car the whole time, so that loan has gone down.. my Student Loans have done nothing but decrease...

Basically, my actual debt has gone down outside of the house itself, but yeah, I think my available credit has gone up,.
That and ofcourse in the early years of home ownership you typically have paid very little to the principal of the home so you are showing a very high level of debt to equity ratio.

[Ksyrup]

DW is overrated anyways..

I'm looking forward to living out of Florida for a period of time, after which I bet I'll enjoy DW much more. Living there, it was just too much of the Mouse, all the time.

I've come to the conclusion, 8 months after moving, that I prefer Florida as a vacation destination.

[Daimyo]

My advice would be to 1) pay off all your credit card debit and then 2) lower your monthly tax deductions by about $200/month and 3) open an ING savings account and create an automatic deduction for at least $250/month (the $200/month you save on deductions + $50/month you save on CC interest). That way by this time next year you'll have $3000 + interest in your ING account that you can use for your dream vacation.

[wade moore]

That and ofcourse in the early years of home ownership you typically have paid very little to the principal of the home so you are showing a very high level of debt to equity ratio.

But they don't know what equity I have in the house, right? Or are you just saying they assume that?

[LoneStarGirl]

I am getting 4K from school this semester and it is all going towards debt. I wish GE could go on a trip or something with it, but we are trying to be 'responsible'

[LoneStarGirl]

I have been to Disney World 8 times in my 22 years and I have loved it everytime. GE has never been so I cannot wait to have kids so we can have an excuse to go. But I would never want to live close to DW

[JonInMiddleGA]

But they don't know what equity I have in the house, right? Or are you just saying they assume that?

Maybe I'm just having a really dim moment here or something, but ... why would you think they don't know how much equity you have on the house?

The appraised value of the house is a matter of public record, so are any comparable transactions in the area (if they wanted to do their own formula on it's approximate retail price). They also know how much you still owe on the house (I'm assuming here that you have a mortgage from a traditional source, as opposed to something like a personal loan from a family member or something).

Value - outstanding debt = equity.

[wade moore]

Maybe I'm just having a really dim moment here or something, but ... why would you think they don't know how much equity you have on the house?

The appraised value of the house is a matter of public record, so are any comparable transactions in the area (if they wanted to do their own formula on it's approximate retail price). They also know how much you still owe on the house (I'm assuming here that you have a mortgage from a traditional source, as opposed to something like a personal loan from a family member or something).

Value - outstanding debt = equity.

Yeah, it's a traditional loan.

I know they could find it out, but that's not part of the calculation of your credit score, is it? If they're basing it on the appraised value for tax purposes - then my credit score is hosed until I sell this house or they give it some sort of real assessment ;).

Maybe I'm being naive here. I just didn't think that had anything to do with your credit score.

[st.cronin]

It's probably based on the amount of the original loan, is my guess. If you borrowed 150,000, and it's now down to 100,000, they may take a guess at equity = 50K. I think both amounts are recorded on the credit report, so that would be a quick and dirty way of guesstimating.

[wade moore]

It's probably based on the amount of the original loan, is my guess. If you borrowed 150,000, and it's now down to 100,000, they may take a guess at equity = 50K. I think both amounts are recorded on the credit report, so that would be a quick and dirty way of guesstimating.

That would make sense to me... I'm better off if that's the case since I'm taxed on a value that is a little over 1/2 of what I paid for the house.

[st.cronin]

That would make sense to me... I'm better off if that's the case since I'm taxed on a value that is a little over 1/2 of what I paid for the house.

If I understand you, aren't you worse off, since the actual equity would be higher than what you have paid for?

[wade moore]

If I understand you, aren't you worse off, since the actual equity would be higher than what you have paid for?

You're misunderstanding...

The county says my house is worth about 75k and I paid 130k...

[st.cronin]

You're misunderstanding...

The county says my house is worth about 75k and I paid 130k...

Ah. Well, I guess you're not moving anytime soon.

[wade moore]

Ah. Well, I guess you're not moving anytime soon.

Nah... the county assessment is so absurdly off it's not even funny. When I had a private assessment done it was about $140k when I bought the house.. and that was with the place in pretty sever disrepair which I have fixed a fair amount and would fix even more if I went to sell.

[stevew]

But they don't know what equity I have in the house, right? Or are you just saying they assume that?

Overall debt ratio, I would assume. Before you bought your house, lets say for example your report showed balances of 5k current debt on 25k total available balance. Now you show something like 125k overall debt on 150K balance. While the amounts aren't all factored exactly like that, they base the scoring on what similar people to you have done with similar mortgages and debt profiles, and determine your risk level. I think you have to pay on a mortgage for a bit more than 2 years before it has aged sufficiently to give you any kind of substantial boost.

[SnDvls]

go to WDW I'll be there too in March with the wife and kid
although everything we've read says it is a fairly busy time to go.

[wade moore]

Overall debt ratio, I would assume. Before you bought your house, lets say for example your report showed balances of 5k current debt on 25k total available balance. Now you show something like 125k overall debt on 150K balance. While the amounts aren't all factored exactly like that, they base the scoring on what similar people to you have done with similar mortgages and debt profiles, and determine your risk level. I think you have to pay on a mortgage for a bit more than 2 years before it has aged sufficiently to give you any kind of substantial boost.

Makes sense... thanks!

[Ksyrup]

You're misunderstanding...

The county says my house is worth about 75k and I paid 130k...

We had the same thing with our house in Florida, and now with our house in Kentucky. In 2001, we bought our house in Tallahassee for $130K, but it was taxed at the value of the land only (new house) for the first year. The it got bumped up a couple of years later to something short of the original amount we paid, less Florida's $25K honestead exemption. Meanwhile, housing prices skyrocketed, and we sold the house last April for $225K. I think our last tax statement indicated the assessed value at something around $95K (again, taking the homestead exemption into acacount).

And I'm noticing the same trend with our newly-built house in Kentucky. These governments could make some serious coin if they worked off of accurate info.

[Logan]

And I'm noticing the same trend with our newly-built house in Kentucky. These governments could make some serious coin if they worked off of accurate info.

Unfortunately, New Jersey government is working off inaccurate info and still robbing its residents.

[stevew]

I really want to do the WDW thing, but I think we're going to wait for a year or two until the 3 year old gets a bit older. My 8 year old is seriously jones-ing for it. At the 3 year olds age, I just don't think it will be that fun, especially when we're talking 2-3 grand.

[lordscarlet]

My advice would be to 1) pay off all your credit card debit and then 2) lower your monthly tax deductions by about $200/month and 3) open an ING savings account and create an automatic deduction for at least $250/month (the $200/month you save on deductions + $50/month you save on CC interest). That way by this time next year you'll have $3000 + interest in your ING account that you can use for your dream vacation.

Quotes for truth. (Even though Butter said not to bring that up ;) )

[lordscarlet]

I have had 5 in the past 2 years or so, and all are/were 12-18 month 0% intro rates. And that doesn't account for the scores of offers I've thrown away, or the 24-36 month 0% rates I've gotten with Dell, Best Buy, Sleep Outfitters, etc., at specific stores. I'm paying all of my accounts down and not spending a cent on interest. And flipping the balances is pretty simple - all you have to do is keep track of the terms on a spreadsheet (or whatever method works for you) and consolidate expiring card balances onto the next card. Right now, I've got 3 open CCs with 2 expiring in May, and I'll be combining those onto 1 card in April.

But this is clearly not the norm.

[Butter]

My problem (well, as far as taxes go), is that my salary keeps going up. It has gone up about 45% in 4 years on the job here, frankly without any kind of predictability, and I assume it will continue to rise, if a bit more slowly. With the fluctuation in my income status, I have set my deductions on "1" (when I could rightfully claim "4") in order to avoid any kind of tax bill at the end of the year. I already have to pay 500-700 dollars a year in city income tax, which I usually pay with my state tax refund...

[st.cronin]

My problem is that my salary keeps going up.

You poor guy.

[KevinNU7]

Butter whenever you get a raise ask to get a form to change your status. The forms typically are pretty detailed and explain how to caluclate what your number should. Calculate out your number, subtract 1 or 2 and then fill it out and submit.

[lordscarlet]

I know this is beyond the scope of what this poll/thread were looking to accomplish, but y'know what would be interesting? If the responses were broken down between advice from parents vs non-parents.

What would be your assumption?

[Ksyrup]

But this is clearly not the norm.

It should be. Aside from the obvious issues like bad credit and such, I don't understand why someone would not do this. If you have a credit card with a balance, you're throwing away your money on interest.

[Franklinnoble]

Pay off the credit card.

Then use the card to pay for the Disney World trip. Rack up the points for your next vacation.

[Ksyrup]

What would be your assumption?

That parents would be more inclined to take the kids to WDW than to pay off debt.

I assume that's what he would assume. :)

[lordscarlet]

Move the debt into a sensible place (either an interest free period on a new card or a loan) and do both imho ...

Your kids are at the age when they'll appreciate the trip and non-sensible as it might seem there are some things which are worth more than money imho, build some memories for them to look back on when they're older ...

(I'd much prefer my kids to remember their childhood with me as as fun rather than think 'well he was a frugal person' ..... ;) )

I went to Disney when I was 7. The only thing I remember is seeing an Armadillo in the campgrounds.

Ah. Well, I guess you're not moving anytime soon.

I thought this was fairly common? Everywhere in this area has the assessment far lower than the true value.

My problem (well, as far as taxes go), is that my salary keeps going up. It has gone up about 45% in 4 years on the job here, frankly without any kind of predictability, and I assume it will continue to rise, if a bit more slowly. With the fluctuation in my income status, I have set my deductions on "1" (when I could rightfully claim "4") in order to avoid any kind of tax bill at the end of the year. I already have to pay 500-700 dollars a year in city income tax, which I usually pay with my state tax refund...

I'm not sure why you'd owe money because of increased salary? Your withholding is based on the deductions you can make at tax time, not your salary.

It should be. Aside from the obvious issues like bad credit and such, I don't understand why someone would not do this. If you have a credit card with a balance, you're throwing away your money on interest.

A lot of things should be but aren't. People shouldn't drive SUVs to get to soccer practice. People shouldn't get interest-only mortgages (I'm sure I'll find someone that disagrees). People should load up their 401k while they're young. People shouldn't smoke cigarettes and trans fats. The fact is, the majority of the country does not flip between 0% interest credit cards, and as expected butter has ~10% on his.

[lordscarlet]

That parents would be more inclined to take the kids to WDW than to pay off debt.

I assume that's what he would assume. :)

He could also assume that singles don't think about the future and just rack up debt with no regard. :)

[Ksyrup]

A lot of things should be but aren't. People shouldn't drive SUVs to get to soccer practice. People shouldn't get interest-only mortgages (I'm sure I'll find someone that disagrees). People should load up their 401k while they're young. People shouldn't smoke cigarettes and trans fats. The fact is, the majority of the country does not flip between 0% interest credit cards, and as expected butter has ~10% on his.

I'm not disagreeing with you and I understand your point, but the fact is, everything you mention is a sacrifice of some sort (other than the mortgage thing, which I think is a bit more difficult for people to understand than 0% interest CCs), which is why people don't act on them. OTOH, acting to save yourself money that would otherwise be spent needlessly seems like a no-brainer to me.

To put it in its simplest terms, rather than charging you for the opportunity to pay your debt back over time, banks are offering that opportunity rent-free. That's not easy to understand and act on?

[Logan]

People shouldn't smoke cigarettes and trans fats.

I don't know man...you ever smoke some trans fat? That stuff will MESS you up!

:)

[stevew]

Interest only mortgages make my head spin. I understand the speculation concept, that you are banking on your house having a massive increase in value to offset the fact that you haven't paid on it in 5 years(or so). But I don't think I could sleep well at night if I were paying 5k(or thereabouts) a month in an interest-only note.

[lordscarlet]

I'm not disagreeing with you and I understand your point, but the fact is, everything you mention is a sacrifice of some sort (other than the mortgage thing, which I think is a bit more difficult for people to understand than 0% interest CCs), which is why people don't act on them. OTOH, acting to save yourself money that would otherwise be spent needlessly seems like a no-brainer to me.

To put it in its simplest terms, rather than charging you for the opportunity to pay your debt back over time, banks are offering that opportunity rent-free. That's not easy to understand and act on?

And, as I believe I stated, I have a $250k mortgage and could not get a 0% interest card immediately before or after taking on the mortgage. But I qualified for the mortgage with ease. They can be stingy with the 0% cards, even if you get the offers in the mail.

[lordscarlet]

Interest only mortgages make my head spin. I understand the speculation concept, that you are banking on your house having a massive increase in value to offset the fact that you haven't paid on it in 5 years(or so). But I don't think I could sleep well at night if I were paying 5k(or thereabouts) a month in an interest-only note.

Indeed. This market especially was flooded with them it seems, and now, as expected, the market has slowed significantly. People that bought roughly a year ago may even be seeing losses. I have had two mortgages and they have both been fixed rate 30 year mortgages. Particularly with rates as low as they have been in recent years I don't see how you can't go with that kind of security.

[JonInMiddleGA]

What would be your assumption?

I would expect the parents to lean more toward doing WDW than the non-parents. Not 100% for either group by any means, but a stronger lean from those with kids vs those without.

I can definitely say that my answer would have been quite different 10 years ago than it is now.

[KevinNU7]

And, as I believe I stated, I have a $250k mortgage and could not get a 0% interest card immediately before or after taking on the mortgage. But I qualified for the mortgage with ease. They can be stingy with the 0% cards, even if you get the offers in the mail.
Add on to the fact that part of the 0% cards is that you pass their standards. One of their standards is how much money you make. Since Ksyrup is a lawyer I will assume he is doing very well and that plays into it.

[Ksyrup]

Eh. I think you guys give CC companies too much credit (no pun intended). I can remember making peanuts working for the state and having a card that the company kept increasing, to the point where it was up to around a $20K limit. I thought that was insane, since I was barely making more than that in yearly salary at the time, but never complained about it. Then I got married, and my wife had a card with the same company, so we called to cancel her card (she had like a $10K limit IIRC) and they proposed merging the accounts/limits and increasing our limit, so that we'd end up with one card with a $42K limit! Insanity.

My point is that CC companies deserve what they get. Your experience might be that it is impossible to get 0% interest cards, and that might be the case. At the very least, I think it's something people should be actively seeking, and I think with the way CC companies dole out cards, it can be achieved. You might get smaller lines of credit, but I bet you could still get them fairly easily.

[Marc Vaughan]

I would expect the parents to lean more toward doing WDW than the non-parents. Not 100% for either group by any means, but a stronger lean from those with kids vs those without.

I can definitely say that my answer would have been quite different 10 years ago than it is now.

I'd agree with that presumption - when I was single I found it much easier to plan ahead than I do now, kids grow and change fast and I think its very important to enjoy the day as much as possible ... after all in a few short years they might not want to do such a trip with you*.

*My daughter turns a teenager** in a few months, she's still at the age where she has fun with dad and goes to the cinema with me etc. - but its not going to be long before its 'not cool' to do that sort of thing .... thats why I'm glad that I have memories made already and not just a sensible savings plan :D
**Yes that does make me an old git, thanks for reminding me***
***But young at heart :D

[Marathoner]

Pay off your debt, nothing will make you feel better. Also if you can change your exemptions so you DON'T get a refund. A tax refund is just an interest-free loan to the government. They keep money that is rightfully yours all year when you could be using it to save and invest.

[CU Tiger]

I didn't hav time to read all the replies, but as a volunter financial counselor at my Church, I ahve learned to hate debt. That jades my answer a bit.

But look at it this way. If you had NO credit card debt, would you be willing to finance a Disney vacation on a credit card (at the current interest rate)

If the answer is no, you have answered your own question. While I certainly don't know you, I would make a great leap that this will NOT be the only time in the next 4 years wen you can go. I think that is an emotional ploy added by you to justify your argument, nothing wrong there just pointing out thats what I believe.

If you answered yes, I would wilingly go into debt for a family vacation, then you have also answered your own question.

[JonInMiddleGA]

Pay off your debt, nothing will make you feel better.

I can't help but think you really ought to consider trying some other recreational activities in your life.

[wade moore]

I can't help but think you really ought to consider trying some other recreational activities in your life.

:D:D:D

[Chief Rum]

I would pay off the debt and then charge your trip to Disney.

[stevew]

If you pay off the debt on the cards, it's possible that you may be able to talk the interest rates down a bit on your current cards/get a better card in the same banking family.

[Raiders Army]

I've got kids and I voted for get out of debt. It's funny that most of the comments are for go to Disney yet the poll contradicts the vocal minority. That is, unless the ones who voted for paying off your debt are including the ones that said pay it off and use your credit cards to go to Disney. There are a lot of other things you can do with the money that will provide just as memorable moments.

If you've never been on a cruise, I'd suggest that. Cheaper to a little cheaper (depending on when you go) plus you can the Bahamas, Carribean, etc.

Edit--or go see the country, like Mount Rushmore, New York City, Hollywood, Vegas etc.

[Franklinnoble]

Take the Disney trip, have your kid piss off the guy in the Tigger costume, videotape when he gets smacked, sue... profit!

[k0ruptr]

I'm not yet a parent, But I say take the kids and make the trip.

[Butter]

It's a blowout! 3-to-1 against. Right now, we are still thinking about it, it's still just one of many possibilities on what to do with the money. But considering my wife is about 50/50 right now, making the trip is definitely a strong possibility. Thanks for the interesting discussion, at least. You have given me plenty to consider.

[lordscarlet]

I came across this today and it seemed to be on topic:

hxxp://www.debtfolio.com/

[Mustang]

Take the Disney trip, have your kid piss off the guy in the Tigger costume, videotape when he gets smacked, sue... profit!

Sounds like the underwear gnomes..

Step 1. Find Tigger
Step 2. ??
Step 3. Profit!

[Warhammer]

I am a firm believer in the occassional splurge. I find that many people are diligent about paying things off, and then run the bills right back up in a binge because they have pent up demand for whatever. People that responsibly pay stuff down while also indulging from time to time do much better.

[Butter]

I have voted. I have spoken. Turns out I'm better than 50/50 for a promotion here at work, so that tipped the scales. We're booking the trip this weekend, after my tax refund hits the bank Friday.

[JonInMiddleGA]

I have voted. I have spoken. Turns out I'm better than 50/50 for a promotion here at work, so that tipped the scales. We're booking the trip this weekend, after my tax refund hits the bank Friday.

:) :cool: