Changing jobs while paying down debt

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Changing jobs while paying down debt

Post by pejp » Mon Feb 12, 2018 11:31 am

I've posted before for help and advice on how to pay down a rather large debt I've accrued ($22k on credit cards) as a result of expensive medical treatment that was only partially covered by my insurance, and also around an HELOC based 'piggyback' mortgage I took out when I bought my property, which has concerned me due to rising interest rates. I got some great advice and feel more confident and have formulated a plan to pay it down.

The absolute basics..

HH income of around $280k this year(that was skewed this year by unusually high bonus, which isn't guaranteed). Usually HH income of $240k (me = 190k, wife = 55k)

$124k HELOC @ prime + 1.99%

$22k credit cards @ 17% interest.

I'm not at absolute panic level, but I do feel I'm at the point where debt is becoming a very serious concern for me.

I'm in the very late stages of negotiation regarding a new job. The new job is in a lot more corporate environment than I'm used to, and is a 30mins drive from home vs the 5mins drive or 25min walk I currently have. It would be a sizable raise (around $50k more), but I definitely see it as somewhat of a leap into the unknown. My current job is secure, I have a lot of freedom, although room for progression is limited. Both firms are fairly sensitive to market conditions, the new job probably slightly more sensitive (I work for a global active asset management firm, new job is with a US only passive/index based firm). One of my recent concerns (along with the week of PTO I'd be giving up!) is the wisdom around taking a new job whilst also paying down debt. It's a good opportunity, and the increased income would mean I could pay down debt even more quickly, but I'm now worried that I should just sit tight in the comfortable secure role until I've paid it down, rather than risk a move that may not work out. Any advice here? Should my debt situation be a factor in this decision, or do I just go ahead, take the increased income and hope for the best!

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Re: Changing jobs while paying down debt

Post by bloom2708 » Mon Feb 12, 2018 4:19 pm

Income doesn't seem to be your problem. Do you track spending closely? Where is all your money going?

Living close to work gives you an extra hour (or more) every work day. That is valuable. Another $50k (less taxes) doesn't seem like it will get you out of the hole much faster. Also, it adds to your career uncertainty.

What is your equity on your home? The $22k doesn't seem like that should take more than a few months to pay off.

I think the Total Money Makeover book by Dave Ramsey could straighten you out in 1-2 years. You would have to really hit it hard. Sell stuff. Quit spending. Stop most investing. The plan works. Most people won't commit to the intensity level required to make it work fast.

I'd look at options to keep your current job and thrash the debt.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

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Re: Changing jobs while paying down debt

Post by N10sive » Mon Feb 12, 2018 4:34 pm

I don't think income/debt reduction based on salary should be a question.

It should be based on your career goals and what your immediate/future plans are. My concerns for the new job would be job security.

I posted in your last thread but given you posting your salary here, the 22k in debt isn't a lot in comparison. Next years bonuses could wipe the cc debt out at either company....

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Re: Changing jobs while paying down debt

Post by Watty » Tue Feb 13, 2018 6:56 am

A couple of things;

1) Unless you have credit problems you should be able to get a credit card with a much lower interest rate.

2) You didn't mention a car payment so iIf you have a paid of car then you may be able to get a car loan at a much lower interest rate to pay off the credit card.

3) The new job with the longer commute would require about an extra hour per pay. That is doable but after taxes, commuting costs, and the value of your time that is not a big gain. It still could be a good job to take but I would decide that based on the non-salary factors.

4) I agree that spending is likely your problem and not your income. It would be good to track every dollar you spend for a while to figure out where it is going. From what you have said it sounds like you have a large mortgage payment but even with that you have over $20K a month in income before taxes. You should really have a lot of disposable income.

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Re: Changing jobs while paying down debt

Post by Olemiss540 » Tue Feb 13, 2018 7:39 am

$50k more when you need it the most? Sign me up!

Sounds like a blessing given your circumstances. That's a median household's income of increase for driving a pretty reasonable commute....

Does your wife like her job? Have kiddos?
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

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