Last night I got a call from a friend looking for some financial help. He has $14,300 in debt and has a goal to be debt free by November. Before I put together a plan for him, I’d like to hear what you have to say about it!
Here are the details of his debt:
- Personal Line: $3,500 balance @ 15% – $7,000 limit
- Credit Card #1: $2,300 balance @ 9.6% – $5,000 limit
- Credit Card #2: $6,600 balance @ 8.5% – $8,000 limit
- Credit Card #3: $1,900 balance @ 18% – $2,000 limit
Card #3 earns cash rewards  so he’d like to use it for gas and groceries once all the debt is paid off.
His Lifestyle and Money
You’d probably like to know a little bit about him to put the situation in context. He’s single, in his 30s, about two years out of college and works for a mega corp in the Pacific Northwest. I’m not certain on his exact salary, but it should be in the very high five figures.
He is currently paying the following:
- PL: $210 per month
- CC #1: $0 per month
- CC #2: $1,200 per month
- CC #3: $100 per month
In addition, he has the following sources of income that he could use:
- $3,800: company stock that was awarded to him.
- $2,500: company stock that will be available in August.
- $3,000: a possible bonus in September. However, if possible, he’d like to use this for something else.
What Should He Do?
What he’d like to know:
- Should he sell his company stock and use it to pay off debt?
- How much should he pay on each card each month?
- In which order should he pay off the cards?
Share your thoughts. If you were him, how would you pay off the debt? I’m going to put together a plan for him early next week. I’m open to including any of your suggestions!