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sell an extra car, pay off debt, and roth iras

Posted: Sun Oct 01, 2017 1:14 pm
by adadandhistruck
Hi. Quick question about credit card debt, cars, and roth IRA. would love to hear opinions. I first should give my situation.

Live in southern california $$$. 2 small kids, married, stable job. really want to buy a house, but it's expensive right now and i have some debt i need to kick.

holdings:
about $40k in IRA/401k
$9k in roth ira
$2.5k in MSFT shares
$2k emergency savings
income around $100k a year (new job)

2004 toyota matrix. paid off. great gas mileage. about 165k miles and it still runs great. i take care of my cars and fine w/ doing my own maintenance.

debt:
2006 tacoma (we love camping and outdoors). Purchased a year ago. Big enough to be daily family vehicle. We owe $9k on this. Not an option to sell because it's a useful tool for us.

2013 toyota rav4. value is $14k, we owe $12k. Payments are $400/mo and insurance about $110/mo. We bought it for my wife when she was working but now she's going to school and raising the kids at home so she doesn't drive it much. And she likes driving my truck more. We are heavily leaning to selling this. I'm having a hard time letting it go since we already paid $10k the past few years to drive it. Pay off and keep, or let it go and bank the money?

Credit Card: $13k debt. I want to pay this off asap. This was a mixture of bad habits, living paycheck to paycheck, and having kids before my income went up. I learned my lesson, am now a boglehead, and will never let this happen again.


Sorry for the long post. My current plan is to sell the Rav4, take about $5k from the ROTH to pay the credit card debt, and throw all my extra money at the credit card. Promise myself to never take from ROTH again and replenish it next year. If i dont pay this debt off asap, i wont be able to contribute to the ROTH next year anyway.

Thoughts?

Re: sell an extra car, pay off debt, and roth iras

Posted: Sun Oct 01, 2017 2:05 pm
by delamer
Sell the RAV4, sell the MSFT shares, put that money plus the savings on the RAV4 payment and insurance for the rest of the year toward the credit card debt. Tighten your belts and make a plan to pay off the rest of credit cards by the end of next year. That should be doable, especially without the RAV4 payment and insurance.

Don't touch the Roth. You have a very small emergency fund and could find yourself with more credit card debt in an emergency. With the Roth in place, it can act as a back up to the emergency fund. While the credit card debt is a problem, it isn't an emergency.

Re: sell an extra car, pay off debt, and roth iras

Posted: Sun Oct 01, 2017 3:57 pm
by retire57
delamer wrote:
Sun Oct 01, 2017 2:05 pm
Sell the RAV4, sell the MSFT shares, put that money plus the savings on the RAV4 payment and insurance for the rest of the year toward the credit card debt. Tighten your belts and make a plan to pay off the rest of credit cards by the end of next year. That should be doable, especially without the RAV4 payment and insurance.

Don't touch the Roth. You have a very small emergency fund and could find yourself with more credit card debt in an emergency. With the Roth in place, it can act as a back up to the emergency fund. While the credit card debt is a problem, it isn't an emergency.
+1 :thumbsup

Re: sell an extra car, pay off debt, and roth iras

Posted: Sun Oct 01, 2017 5:53 pm
by FiveK
retire57 wrote:
Sun Oct 01, 2017 3:57 pm
delamer wrote:
Sun Oct 01, 2017 2:05 pm
Sell the RAV4, sell the MSFT shares....
+1 :thumbsup
+2

Re: sell an extra car, pay off debt, and roth iras

Posted: Mon Oct 02, 2017 6:17 pm
by adadandhistruck
Thanks guys. Gonna go that route. Won't be touching my Roth.

Re: sell an extra car, pay off debt, and roth iras

Posted: Wed Oct 04, 2017 8:56 pm
by adadandhistruck
RAV4 sold. Msft sold. $4500 going to cc debt and the rest is being transferred to 0% bal transfer for 1yr. I'll update in six months

Re: sell an extra car, pay off debt, and roth iras

Posted: Wed Oct 04, 2017 9:24 pm
by FiveK
adadandhistruck wrote:
Wed Oct 04, 2017 8:56 pm
RAV4 sold. Msft sold. $4500 going to cc debt and the rest is being transferred to 0% bal transfer for 1yr. I'll update in six months
Good work and good luck!

Re: sell an extra car, pay off debt, and roth iras

Posted: Thu Oct 05, 2017 9:16 am
by Olemiss540
That was fast! Congrats,

Re: sell an extra car, pay off debt, and roth iras

Posted: Thu Oct 05, 2017 9:54 am
by N10sive
adadandhistruck wrote:
Wed Oct 04, 2017 8:56 pm
RAV4 sold. Msft sold. $4500 going to cc debt and the rest is being transferred to 0% bal transfer for 1yr. I'll update in six months
I was going to mention looking at 0% balance transfer cc's. Although it isn't a preferred method of a boglehead, it can help reduce cc debt and paying lower interest. This is how I am getting out of debt. Don't rely on it though. This forum has helped in that regard in curbing impulse purchases and things of such nature.

Re: sell an extra car, pay off debt, and roth iras

Posted: Thu Oct 05, 2017 10:18 am
by delamer
adadandhistruck wrote:
Wed Oct 04, 2017 8:56 pm
RAV4 sold. Msft sold. $4500 going to cc debt and the rest is being transferred to 0% bal transfer for 1yr. I'll update in six months
Congrats!

Re: sell an extra car, pay off debt, and roth iras

Posted: Thu Nov 02, 2017 9:27 pm
by adadandhistruck
Olemiss540 wrote:
Thu Oct 05, 2017 9:16 am
That was fast! Congrats,
thanks! yep i figured the best way to act was fast and decisive. Wasn't easy letting the extra car go but now that it's gone we dont miss it. Carmax gave us a little than the highest KBB trade in value so i didnt wanna screw around waiting for private buyer. already made a good dent in the debt in my first month.

also just finished reading "automatic millionaire" and the bogleheads guide to investing. i'm so stoked on saving. Must be getting old