Credit Card Roulette
Hi Scott,
I've recently received an inheritance of $200k. My partner and I have $60k debt due to his past job loss coinciding with my maternity leave. What should we do regarding the debt repayment of $60k, creating a Mojo fund and preparing to buy a house? I have some hardship agreements with closed credit accounts at 0 percent interest -- do I repay these? And can I negotiate a lower figure to pay out my debts without damaging my credit rating for future lending? It's hard to get a straight answer from the banks!
Mary
Hi Mary,
The first thing I’d check is whose names the debts are in. If they’re in your partner’s name, and the inheritance is in your name, you may be able to cut a deal with the banks. However, part of being a grown-up is honouring your debts. If I were in your shoes I’d repay the debts in full, regardless of whose name they’re in. It’s the right thing to do.
Next, I’d open up an online saver account and deposit three months of living expenses in it ($12,000), so that you have a sense of Mojo in your life. Then, I’d deposit the rest in another high-interest online savings account and label it ‘deposit’, and continue to add to it for the next two years (even if you can afford a home right now).
In the meantime, I have a challenge for you. Over the years I’ve helped a lot of people who’ve come into large amounts of unearned money. Most of them end up blowing it -- especially people like you, who have a track record of spending more than they earn. Please prove me wrong!
Scott