I discovered last year that my wife spent up the credit cards to the tune of about $30k across two cards buying subscription boxes, useless trinkets, and enough kids clothing to compete with a Goodwill store, but this isn't Relationship Advice and I think I have that under control (now). Since then I have used the maxed out credit cards to demonstrate to her clearly that debt is pain, and having $500 every month go into the interest black hole puts a strain on things and robs joy from other parts of your life. What I didn't tell her when I found out is that I had means to fix it immediately, but resolved that this would be painful for us as she struggled to manage the household budget without being able to drive us further into debt.
I have an investment account (Schwab) with about $23k liquid assets and another $80k in equities and mutual funds built up over 30 years of light investing to save for a rainy day. I was planning to apply the whole liquid portion to the credit card balances, obliterating the smaller card, which has a balance of $7k and has a monthly interest of $340. That leaves $16k to pay down against the other card, which has a balance of $23k and a monthly interest of $220. The outstanding balance on this card will then be $7k, which I want to zero out. To do that I will need to liquidate some stocks, but as I've not done this before I was hoping to get some guidance from some who may have gone down this road before.
Here are my questions. 1) First, I suppose I should start with, is this a good idea? Am I on the right track, or do I need to be looking at this differently? 2) Is zeroing out the debt all at once the smartest thing to do, or are there unintended consequences I need to be aware of? 3) For the stock liquidation, are there tax considerations I need to bear in mind? I'm in the US and the stocks are all on US exchanges. 4) I'm assuming it costs me nothing to withdraw the liquid portion of my account, like it would be for a bank, but am I oversimplifying? 5) Following the wipeout, I'm planning to outright cancel the high limit card and retool the lower balance card to be for recurring monthly bills only, and then transfer what we were paying monthly in interest directly into savings so we don't have the temptation to spend more money. I figure we've done well enough on reduced means, might as well make the "pay cut" permanent but not really since we will be paying ourselves instead of creditors. The lesser card has points associated with it, which is why we want to keep it, but is this a good idea so long as we zero it out every month?
Submitted August 19, 2019 at 08:27PM by novacthall https://ift.tt/2NfxTgB
