Ask Terry Questions Credit cards

Credit cards

By Terry Savage on October 13, 2023 | Credit/Debt

I am 57 with $90,000 in 401k, and a $200,000 mortgage on a $350,000 home. I have $26,000 in credit card debt. I have about $1,000 to $1,500 to pay the credit cards every month. Should I take out a home equity loan to pay the cards and then put the remaining available money into 401K after I start paying the $350 or so for the HE loan? Not sure because I really don’t want to work past 70 if possible. But I am thinking I will never pay off these cards. Thanks Terry!

Terry Says

No, a home equity loan would be costly and you’d probably get into trouble with your credit cards again.
I’m going to suggest that you contact the National Foundation for Credit Counseling at 800-388-2227. Taht will connect you to the nearest member agency of this non-profit organization. YOu can trust them. They may be able to help you work out a payment plan with your creditors, and you then send them one check every month, which they disburse to creditors as part of the plan. This will impact your credit report, but will be the least expensive way out.

If you had extra money, I would advise the simple credit card paydown plan that will pay off each card in less than 3 years. (Paying the minimums could take as long as 30years!)

It’s a simple formula. Take the current minimum monthly payment on the card and DOUBLE IT! Then pay that same amount every month (not double the new minimum). Don’t charge another penny on the card and it will be paid off in less than 3 years. If you can stick to that plan, with one or two cards, the balance will melt away.



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