Basics:
Divorce finalized 1 week ago.
Joint custody of 2 young children.
She kept the house (72K equity), her student loan (14 K), and the 2009 car that we owe $2600 on.
I kept my 401K (96k), credit card debt (14.5 K) , get to pay off her car and giving her a $2000 signing bonus to get it done.
Credit card paid the lawyers, ridiculous vacations to try to make her "happy", and some household items when I had to start over.
I kept all of my tools in the divorce and have already started doing some odd jobs for friends.
My new annual net take home is $41,600 from my 9 to 5 job.
I have to pay $12,012 in child support.
I am renting a duplex that is geographically between my job and the children, it costs $995 ($11,940). Lease for 10 more months.
My utilities are $125 a month, $40 for cable internet, $30 cell phone, $45 for H2O, and $10 Netflix for a total of $3,000 annually.
I drive a 10 year old car that we "bought" new and I do all my own maintenance. Gas, insurance, and plates costs $185 ($2220).
So I am left with $12,428 annually to feed myself and pay down the credit card debt and cash to her.
I have the following credit card debts:
Local bank - $1400, 8.99% APR - monthly bills go on this one.
Chase - $6700 transferred balance, 0% APR for 15 months
Discover - $4200, 3.99% for 12 more months
PNC - $2200, 0% APR for 18 months
Total of $14,500 of credit card disaster.
I need $4600 in cash NOW to pay off her car and her signing bonus.
This is going to come from my 401K, no getting around it. Loan to myself is 2.125%. I can only have one loan of this type at a time from my 401K.
My questions are:
Best strategy to pay down this debt?
Obviously the highest interest credit card 1st and don't ever carry a balance on it again.
Pull all $19,100 out of my 401K now since I can only have one loan?
My concern is that if I don't get the credit cards paid down before the introductory rates run out I'm going to be stuck transferring them to another card and paying fees.
Of course this takes a big hit on my retirement, but gives me the piece of mind of only managing one payment and I am paying myself albeit loosing money from not being in the market.
At the end of my lease I hope to purchase a house, again using my 401K as down payment. I can have a 2nd loan from my 401K for a house. In my area I can buy houses that need TLC for 60-80K, flip and sell 2 years later for a profit. Much cheaper than rent and will build equity.
Thoughts on this debt disaster?