I racked up $33k in credit card debt. About $20k of it is interest free until Dec 2026.
I had a good amount saved up, but bad luck came in bunches. Surprise divorce to lose half, the company I was working for went under where I was without work for 4 months, emergency vet bills, a new AC, and took a lower paying job due to the state of the job market.
House: Worth $500k. Owe $179k. Lots of equity. 2.99% interest rate. Needs a new roof soon. Very open to selling and moving (interested to live somewhere else but it hurts to let go of the interest rate).
Mortgage: $1300 month
Car payment: $445 (will be paid off in Dec 2026)
Savings: $5k
Salary: $100k. Was making $150-160k but had to take a downgrade since I was unemployed. Plan is to search for a position closer to what I was making.
Initial thoughts:
Option 1:
HELOC loan to pay off credit cards, minor home repairs to sell, moving expenses. Sell home, pay off heloc, rent for a year elsewhere to build up savings. Perhaps invest sale proceeds?
Option 2:
Stay in current home. Take a heloc large enough to get out of credit card debt and nest egg for the roof when/if it needs to be replaced. I know taking a heloc to get out of debt must be done with great discipline and I understand that.
Open to other ideas
TLDR: Looking for the smartest way to get out of debt, open to selling/moving.
Options to eliminate credit card debt
byu/laflamablanca421 inpersonalfinance
Posted by laflamablanca421
3 Comments
Dont sell your house. That payment is too good to leave behind and keeping you in a good place financially. While also having the option to sell if matters get dire. Live frugal for 9 months and chip away at the CC debt until November. Then take out a 401k loan to pay off the remainder before getting high intrest on that debt the following month (DECEMBER).
By no means am I an expert. But im in a similar situation and this is my gameplan.
Is the house too big for you after the divorce? Is all the equity yours?
Unless there is another reason for moving (like downsizing), I’d suggest staying in the current house and getting a HELOC with no minimum draw. The LOC part of a HELOC is a line of credit, which generally means you can with draw when you need to, and you only pay interest on what you have outstanding. So get the HELOC now and withdraw enough to pay off interest accruing credit card. Over the next few months, make monthly payments to pay off the LOC as much as you can until Nov when you make another withdrawal to pay off the other credit card before it starts interest. Then continue making payments to the LOC monthly to start paying it back. Then you have it accessible for whenever you need to replace the roof and can withdraw at that time to pay for the roof.
The mortgage interest rate is wonderful, but you don’t say what the credit card rate of interest is. So let’s assume you get a HELOC, that will certainly be a lower interest rate. So that one is easy. Do that plan immediately while you shop for a new job and a new city. Hold off on the roof. It’s not necessary at the moment, and bad luck happens. Meanwhile, are you open to having a roommate? A little rental income may pay for the new roof by itself.