Hi:) I desperately need advice from someone who knows!

**bren** · 06-06-2008, 12:56 PM

Hello all...I am 53 yrs. old, work fulltime, dh's only income is SS and I am trying to dig my way out of a big, dark hole of bills! I have appx. ten thousand dollars worth of debt, some credit cards, medical, etc...my question is I have 2 CD's which are for 5 thousand dollars each..do you think I need to cash in 1 of the cd's and put the cash toward debt reduction? I can't even think of cashing in both, but have convinced myself that I could bear to use 1 knowing that I would still have the other one to fall back on in case of emergency...my short term goal is to get out of debt except for mortgage, long term goal pay mortagage off asap, so that by the time I reach retirement age, we will have no bills except living expenses...Can anyone offer any advice? Thanks in advance! Bren

**The Muse** · 06-06-2008, 01:04 PM

I guess it depends on the rate of return on the CD vs. the interest rates and terms of your debts.

Unless your credit card balance is relatively small with a low interest rate, it's probably best in the long run to get rid of that sooner than later.

**PrairieRose** · 06-06-2008, 01:07 PM

I'd almost bet that the rate of return on the cd's is less than the rate on your debts. If you are working on debts that aren't charging interest I'd make payments on them rather than cashing out the cd. I think it's a smart idea to have some money available to you but kudos to you for your commitment to getting out of debt.

**Greebo** · 06-06-2008, 01:13 PM

I can give you a very accurate answer with numbers to back it up if you will please provide amounts of debts with the corresponding interest rates, and the interest rates on the CDs.

**forHISglory** · 06-06-2008, 01:19 PM

You are getting good advice here. There are some variables that make a difference in what the "right" answer is.

Are the CDs ready to be cashed? If you cash them early, then you lose a considerable amount of money.

Next, compare interest rates. If your CD is paying 4% but your CC is costing you 22%, by all means cash the CD and pay the debt.

**FrugalMomof3** · 06-06-2008, 01:59 PM

I would assume the interest rate your getting on the CD is less than the interest rate your paying on the CC, if that is the case, cash out the CD and put it towards your CC bills.

**pecunierrant** · 06-07-2008, 01:44 PM

Is your job "secure", you don't anticipate being let go in the next 6 months or so?
If your job is secure and the remaining 5k could sustain you in a lay-off/illness then I'd go ahead and use the cd to pay down the debt.

Dave Ramsey would say take the cd's down to $1,000 and use the rest to pay off the cc, but you could find something in between if you chose to.

Personally, I'm not keen on being that low on cash like he suggests. We had both our cars break down in two weeks time and that would not have covered the repairs and the tows, etc.

**SHOPGIRL** · 06-09-2008, 11:05 PM

I'd take one of the CD's and pay down your debt.

**EmilyD** · 06-09-2008, 11:14 PM

I agree with using one to pay off some debt.

**Libby** · 06-19-2008, 01:03 AM

Psssst....whats a CD?

**knotme** · 06-19-2008, 07:49 AM

A CD is a Certificate of Deposit available at most banking institutes. You put your money in there for a guarateed return rate of what ever the rates are when you get the CD. I have had some for 5.5%, but rates are lower right now and most are about 3%. You get more in interest than a regular savings account does, but it ties up your money for the term. It is very similar to a Canadian GIC. I had one of these for a few years. Your terms vary from 3 months to 5 years and anywhere in between. Right now I have some that are only 7 month terms and some that are 5 year terms. (plus some that are in between those lengths.)

Hope this helps explain about CD's

**Frugal Nurse** · 06-19-2008, 07:54 AM

Has this Bren been around. There's only one post from him.

**Jeanna** · 06-19-2008, 08:24 AM

I think the first question is can you pay your debts comfortably or are they a stuggle? If it is stapping you to make the payments then by all means cash it in. Of course the cd is not making the amount of interest your loans are but would you feel secure if you only had the one? Just a couple of questions I would ask myself.

**Dave'sGirl** · 06-20-2008, 04:37 AM

I'm curious why you bought $10,000 in cds when you had so much debt.

I guess it'd depend on how much of the principle you'd lose if you cashed them in early. If they are close to maturing, leave them to maturity. If they are mature and you're trying to decide to cash them in, cash them in. You aren't making as much on the cds as you are paying in debt interest.