Complete NOOOB asking for HELP please!

[MrCleanShaven]

Hello Mustachians!

I recently found this site and am blown away by the content. Actually to be honest it is overwhelming. I really don't even know where to start to get my life on track in the most efficient manner. So what I decided to do was ask this wonderful forum for some help and/or guidance! I am going to give you guys some details of where I am in life right now and see what you guys all think would be my best direction for my first few steps. I realize many on this forum seem to be wealthy or financially independent already and I hope to move in that direction. So with the risk of some embarrassment and ridicule here we go.....

I am 44 years old and single. I recently got out of a business that cost me the bulk of my life savings and wasted many years of my life. My current income will be approximately 30k in 2018. I am currently straddled with about 20k in credit card debt. and a medical collection ($2000) so my credit is not good sitting in the 620 range.

Credit card balances are as follows:

Chase Freedom $3600 @ 27%
Chase Slate $1500 @ 0%
Capital One $4500 @ 19%
Barclay $5000 @ 0%
Discover $4000 @ 19%
BestBuy $400 @ 0%
Total Rewards Visa $1500 @ 24%
American Express Blue is at ZERO balance

I just sold off an asset and now have $40,000 liquid. I also started a ROTH IRA in 2017 and funded $1500 and have it set up to do $50 a week in 2018.
I have about $2500 worth of Crypto Currency in Coinbase.


So let's begin!

Do I pay off all the credit cards and medical collection and start fresh?
Do I pay off the credit cards that have an interest rate in full and just pay the 0% ones over time? (medical is also not charging any int or penalties)

Is there a better way to put my $40,000 to work for me to make money while I start paying down the debt more aggressively?

I'd also like to know what should I do as far as bank accounts? Right now I have a Chase Total Checking account and that's it. I closed my Chase Savings because it was charging a monthly fee since I didn't have enough of a balance. Should I look to online banking that offers some interest? Should I play the bonus game jumping around to different accounts? I'd also like advice on doing an optimal credit card strategy? Which should I use for rewards programs, etc. and I see some people talking about ways to make $1500 a year so playing the credit card bonus game.

My expenses are pretty cheap as I have a cell phone for about $100/mo and pay Mom $350/mo rent. My car is paid off but might be near the end of the line! A lot of home cooked meals compliments of Mom and plenty of free food at the casino keeps my expenses down. (I'm a poker player not a gambling degenerate...don't worry. I am a profitable player.)

I know this is a lot all at once gals and guys but I'm hoping for some solid feedback. I understand that much of the information I'm asking for is probably available on the forums but there is just so much and some might be outdated, etc. So thanks in advance to anyone that takes the time to look over my situation and can offer some advice. Feel free to leave any questions you may have and again Thank you!

MrCleanShaven

[Miss Piggy]

Absolutely pay off those high-interest (ouch!) credit cards. No-brainer.

For the medical collection, can you get a discount if you pay it in full? If so, do that, too.

How long do you have 0% on those other cards?

[Raenia]

Credit card balances are as follows:

Chase Freedom $3600 @ 27%
Chase Slate $1500 @ 0%
Capital One $4500 @ 19%
Barclay $5000 @ 0%
Discover $4000 @ 19%
BestBuy $400 @ 0%
Total Rewards Visa $1500 @ 24%
American Express Blue is at ZERO balance

When do the 0% rates expire, and what will the rates be after that point?  Those 19%+ are appalling, pay those off immediately.  That will leave you 26k of your 40k to work with.  Make sure you pay off the others before the interest kicks in.  If I were you, I'd probably just pay off all of it, for simplicity's sake, rather than having to track which rate expires when.  That would still leave you with almost 20k cash.

I just sold off an asset and now have $40,000 liquid. I also started a ROTH IRA in 2017 and funded $1500 and have it set up to do $50 a week in 2018.
I have about $2500 worth of Crypto Currency in Coinbase.

First, set aside enough to be a comfortable emergency fund.  Most people recommend 3-6 months expenses.  This allows you to weather issues like a doctor's visit or a car breaking down.  Next, you are allowed to fund your ROTH IRA through April of the following year, so I would recommend using part of your remaining cash to put 4k more in for 2017, to get to the max contribution ($5500), and then do the same for 2018.  There's no real benefit to waiting and contributing weekly.

Do I pay off all the credit cards and medical collection and start fresh?
Do I pay off the credit cards that have an interest rate in full and just pay the 0% ones over time? (medical is also not charging any int or penalties)

This falls down to personal preference.  It is technically, mathematically better to wait to pay off the 0% debts over time, making sure to pay them off in full before the 0% rate expires.  But, you may get a mental or emotional boost from starting from a clean slate.  You'll have to judge if that is worth the less optimal outcome.

Is there a better way to put my $40,000 to work for me to make money while I start paying down the debt more aggressively?

Your ROTH is the best place to have your money working for you, right now.  Once you've filled the available space in your ROTH, then you can look into opening a taxable account with Vanguard or Fidelity.

I'd also like to know what should I do as far as bank accounts? Right now I have a Chase Total Checking account and that's it. I closed my Chase Savings because it was charging a monthly fee since I didn't have enough of a balance. Should I look to online banking that offers some interest? Should I play the bonus game jumping around to different accounts? I'd also like advice on doing an optimal credit card strategy? Which should I use for rewards programs, etc. and I see some people talking about ways to make $1500 a year so playing the credit card bonus game.

I wouldn't worry about credit card churning right now, while you're still paying off old credit card debts.  That's an expert-level endeavor :)  Start by looking for a good interest-bearing savings account to park your emergency fund in.  Ally bank is often suggested as a good choice, but look into local credit unions and other options.

Good luck!  You'll do fine, just work on one thing at a time to avoid getting overwhelmed.  Take care of the debt situation first, then start learning about investing.  Once you're comfortable with those, you can look into credit card churning and other ways to improve.  I'd also recommend reading this post regarding the best order to invest and pay off debt.

[LittleWanderer]

I would pay down all your debt, even the zero interest cards.  Peace of mind. 

Open a savings account at Ally (or similar) and keep a 3-6 month emergency fund in there. 

Fund your 2017 and 2018 Roth IRA.

That should take care of the majority of the money.

[Calvawt]

Also agree to pay off the high interest cards immediately.  Don't do speculative investments when you are paying someone else such high rates.  Get the credit cards under control and with a payoff plan for the 0% ones before those offer rates expire.  Pay the medical debt now, why take the chance.

You won't be able to do credit card hacking with that low of a score, so get yourself in a better position and in a year or so once your FICO is over 700 you can evaluate that piece.  Normally I would advise against it given your credit card burden right now, but if it is from a business and not just overspending its a different story.

[civil4life]

It may be easier for us to help you if you go to the Case Study group and look at the spreadsheet it provides for giving the group information about how you spend your money.  The other thing that will really help is seeing where your money is going now.  If you do not have a budget start one.  People here typically use YNAB or Mint to track their spending.  Some do it just with an Excel Spreadsheet.  First thing you need is to know where your money is going so you can see where you are bleeding the worst.

First thing PAYOFF the non-zero interest cards.  The best strategy is to pay them off according to the highest interest rate.

Chase Freedom $3600 @ 27%
Total Rewards Visa $1500 @ 24%
Capital One $4500 @ 19%
Discover $4000 @ 19%

= $13,600

BestBuy $400 @ 0%
Barclay $5000 @ 0%
Chase Slate $1500 @ 0%

= $6900

American Express Blue is at ZERO balance

It is up to you whether you want to pay the zero interest ones now, but definitely pay them off before they start collecting interest.

As far as future card use.  You should only put on your cc whatever you are able to pay in full each month.  Do not carry any balances.  There are numerous types of rewards cards.  I personally do not travel much so I do not use the ones that collect travel points.  I currently have a Visa, MC, and Discover that I use regularly that are used based on their rewards.

In the Investment forum there is a thread for investment order https://forum.mrmoneymustache.com/investor-alley/investment-order/.  After you get your budget figured out and know how much you are able to save follow the order to maximize your investment dollars.

Right now you can still contribute to your 2017 IRA so you can do that and not loose out on that as well.

As far as checking and savings accounts there are way too many out there.  I personally use a credit union that is brick and mortar and has helped with really good interest rate loans.  Also I use a couple online only banks.  I recently found CIT Bank which has a 1.53% APY, but not particularly fond of its utility.  The other bank I use is Capital One.  This one I pay all my bills and stuff from.  You really only need to keep enough cash liquid in a bank account for the emergency fund and current monthly bills.

You said you pay $100 for your phone.  That is way too much.  There are many prepaid carriers out there that you can get as low as $15 a month.  Check them out.  Republic Wireless, Cricket, Metro PCS, MintSim, etc.

As far as the car, as long as it does not start to cost a lot for repairs and maintenance drive it until it dies.

Will you be working at a place where you will have 401k or other accounts to build for retirement?

[MrCleanShaven]

Great feedback so far guys! Thank you so much.

Seems like everyone agrees to pay off the interest bearing CC's immediately which is what I am going to do. I will chart out when the 0% expires on the others and set it up to auto pay those monthly in time to not pay any interest.

I am going to call the attorney regarding the medical collection and see if they'd like to settle at a discount.

I looked at my ROTH IRA and noticed that my weekly contributions were being put in for 2018 so I spoke with them and they are going to revert those back to 2017 and I will look to max out the 2017 contribution.

I got an email from CHASE where I have my checking talking about $200 "on us" if I open a savings account with 15k or more and keep it in for 90 days so Im gonna stop in there today and inquire about the details.

Someone asked about my employment and I'll be honest I held this info back at first out of fear of a lot of eye-rolling. I am a professional poker player at the small stakes at this point. I will put in about 2000 hours of play and I net about $15/hr over a large sample size. I am also dabbling in a bigger game where thus far in a small sample size of just 90 hours I am averaging $39/hr. I would expect that to flatten out a bit and hopefully would land in the $25-$30/hr range. That being said having a proper playing bankroll is important and I need to set aside $10,000 to have as my poker bankroll. Although I feel over the course of a year I will for sure show a profit at any given point....day, week or month I can and will lose. So for peace of mind and to avoid going broke I need to have a specific poker bankroll that can handle the potential swings.

Someone mentioned doing a case study, I will search after this reply but if you would link me to what you are talking about I'd appreciate it.

Thanks again to all and I'd love to continue to learn and grow with this community! I will keep updates coming.