Head back towards zero and start over?

andifsohow — Fri, 14 Mar 2008 09:29:17 -0800

I am considering selling off most of my assets to pay some of my debts, and want some outside advice on if I should. I'll try to be as brief as possible.

Current income is about $28K per year; there is reason to believe that will improve shortly, but nothing promised.

Assets:
I have about $28K in a brokerage account; 8 of which is in retirement funds, 11 in a handful of investments, and about 9 in cash. I also have an external savings account with about $3K in it.

Debts:
With the same bank that holds all the assets except the 3K, I've got $19K in credit card debt and $53K in student loans. The CC debt is at a fixed 4.99% APR, the students loans are mostly at 7.5% with about $500 at 11.75%. I have been paying this off most aggressively. Payments for the CC are about $400/month, for the loans about $400 on the bulk and another $150 or so on the smaller one.

I also have $2300 at 1.9%, and another $8K at 4.9%, both fixed until the balance is paid off or I miss a payment, which I'm pretty good about not doing (has happened twice in the last three years, once my complete oversight and the other a matter of a check not getting there in time). Payments on those are $40/mo and $160/month, but I usually pay about $200 on the latter.

The impetus for this is that $3K of the retirement was in a CD that matured yesterday, and I have 7 calendar days to do something with it. If I do nothing, it rolls over for 5 years @ 3.1%. Not great, but better than most options now. If I want to move it out of that bank without penalties, though, I'm pretty sure I need to do that now.

I am considering selling off all non-retirement assets, paying off the CC with the $19K balance, and divorcing that bank (to go to Schwab, most likely). The money is yielding some growth but not near the $1000 a year in finance charges I'm paying on the CC, and ridding myself of that $400/month payment would enable me to go after my other debts more quickly. If I move to Schwab I'd have most of the account privileges I do now as far as no fees, online banking, etc. I'd have $8K in retirement assets, $3K in savings, and have $10 grand of CC and the student loans to deal with still.

It seems to make sense; I guess I'm just leery of selling off everything. I'll be talking to a Schwab person on Monday to make sure I know details. What does the hive mind think?

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Head back towards zero and start over?