Credit card debt, investments and foreign exchange
Hi Terry,
I love listening to you on WGN and find your insights so helpful. You have real advice for real situation. Here’s mine:
I have approximately $25,000 in combined credit card and short term loan debt. My father passed away in June of last year, and left me approximately $60,000 US funds. He lived in Canada and it is about $87,000 Canadian. I need to get rid of this credit card debt because my creditors will not lower my interest rates and it’s just beyond ridiculous. I got into this whole because of various personal issues, divorce, illness with myself, and my kids. I did manage though to buy my own house two years ago with an FHA loan and I have a 2.3% mortgage rate. I currently have a $30,000 401(k). I’m 54 years old and my children are 20, 17, and 15.
I think I should pay off all that unsecured debt, leaving me with my mortgage and car payment only. I have some home repairs to do, but what should I do with balance of the inheritance? CD’s? Roth IRA, stocks?. I’m not getting any younger!
Thank you SO much for your advice and guidance!!
Best,
Terry Says
I’m sorry about the loss of your father, but I hope he is smiling down at you and pleased that his legacy can really get you out of this debt trap. As you mentioned, the Canadian dollar is now trading at a huge discount to the U.S. dollar. But you are transferring over $50,000 — so don’t just accept the rate they quote you when you call to have the money wired into your U.S. account. Demand a special, slightly higher exchange rate that is available for larger transactions. (Terry’s Tip!!)
And have it wired into a bank money market deposit account, so you can write checks and earn interest.
Then immediately pay off your credit card debt. Keep your longest-held card as it helps your credit score. Put the other cards away or close them.
With the money left over, do this with about $25,000: https://www.terrysavage.com/t-bills-beat-cds/
Buy 6-month Treasury bills, currently yielding about 5%! That will put the money out of reach for 6 months in the very safest place. Set it up for the T-bills to automatically renew in 6 -months. You can always change your mind up till the week before they mature.
That should leave a little over $10,000 in your money market account for emergencies. Congratulations! You have a home, a great mortgage and no debt! BRAVO!
(And if you get stuck call me at the number on the email response that notifies you that your question has been answered. I really want to make sure this goes well!!)
The interest will go into yur
