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I feel good!
A few days ago, I met with my personnel advisor about my 401K account. With my recent raise, I elected to increase my withholdings into this account by a substantial amount and that, coupled with my employers’ reinstatement of an employer match has really grown my account over the last few months.
In reviewing my debts, it was apparent that I could utilize this money in a productive way (especially since the stock market is flip-flopping like a fish out of water), so I borrowed some of it and paid off 3 credit cards and closed out the accounts. The interest rate on those cards was between 14.5% and 24.5% while my loan is 7.5% — a fantastic trade off, don’t you think? By cutting up the cards and closing the accounts, I won’t be tempted to run them back up again. My real issue will be withstanding all the offers that are sure to come in the mail for new cards. I’ve tasked my husband with helping me keep on the straight and narrow there.
I’ll admit that I am not the best at personal finance. I’ve run the gamut of being deeply in debt and having creditors calling on a nearly hourly basis despite creditor harassment laws in South Carolina that are supposed to keep that from happening. I currently have two loans in default and one with a judgement against me. I will deal with those in time.
I even tried of those credit counseling services, but that ended up in total disaster! The “counselor” took my money and never paid any of it out to my creditors (which lead to the two defaulted loans and the judgement). The US Postal service is looking into that one now as they defrauded a lot of people besides me.
I did keep one card — it’s the lowest interest rate and has the highest credit line (and also the highest balance), but now I can take all the money I was sending to those other cards and put most of it on this one, thereby paying it down quicker. Now, if only the gods will keep me and my animals healthy, so I don’t have a need to USE the dratted card, I’ll be in great shape financially at least!
The cc companies I cancelled had fits and made all kinds of offers to keep me going, and it was hard to keep saying “no”, but I did and when I finally got off the phone I really felt euphoric.
So, here’s my financial tip to you–if you have a 401K account and it allows loans against it, you have a means of cutting some of your debt down that doesn’t involve one of those credit counseling services or any other risky method. Most 401K loans are done at prime or 1/4% above prime, so you are assured of a great rate and the payments are deducted from your check –sometimes pre-tax which will also lower your income tax deductions — but more importantly, means it’s paid back promptly and with no pain on your part.
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Tags: Financial tips, Women
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November 9th, 2007 at 2:39 pm
An excellent tip! I need to sit down with an adviser and get my 401K straightened out. I’ve been at my current place of employment for a year, but passed on the retirement benefits temporarily because there was no guidance as to where I should put my money… the whole process was very confusing (and I’m not exactly financial-minded, either).
So thanks for reminding me to do that.
November 9th, 2007 at 4:27 pm
Thank you Caroline! The financial company that manages our 401K has these “plans” that you can put your money into. They are rated by the amount of risk involved in them and I’ve got my money spread out among the most conservative (least risk) to a middle of the road one and one with a small amount going to a high risk but high return one. That money is the most vulnerable, but I have gotten some great paybacks on it.
I would think your fund manager would be able to help you figure out something.
Good luck!
Maggie