Need advice on what to do with new higher pay job

If your current credit score is ~600 and you let the bank foreclose on your home, it's going to be quite awhile before you can get another mortgage I would think. I would strongly reconsider that decision.

First get a good chunk of change put aside for a rainy day fund. Probably around 10-15k. Then pay down those debts. Then start working about anything else like new car and such.

OK.. You have multiple things going on here let us try to tackle.

If you plan to get married in 5-7 yrs than your focus needs to be reduce debt and increase credit score.

If your car is 10 yrs old - take it to a shop and spend the money to get it functional for another two years. Unless a transmission or engine goes drive that sucker until it dies. Why? $2000-3000 repair that extends the car life for 24 months is $125 p/mo. I highly doubt you can purchase a new car at such a low car payment with your current FICO score.

401K if you plan to leave the country eventually may not be so beneficial BUT, it does reduce your annual tax burden and it is money that will sit/gain for the next 35 yrs (until you are 65) and you can leave it as benefactor if you have kids. So, even if you don't make it to 62-65 someone else can inherit those funds upon your demise so it isn't a waste. And if your company will match it you should take that contribution as free money.

Next, the house - I would call your mortgage broker and see if you qualify for HARP or any other program to reduce interest rate for an upside-down mortgage. Not sure if you qualify because you missed payments but it doesn't hurt to make the call. Make sure you don't get swindled to extend the terms of your mortgage or reset to reduce your payment by only a few bucks a month. Don't sign any new mortgage paperwork until you share the figures with someone and validate the fees/terms but that may reduce your payment slightly. I don't think foreclosure will help you at this point (see my first sentence) and the best you can hope for is reduced mortgage payment. Plsu, if you plan to get married - it is great to already have a foundation/home vs. starting afresh as doubtful you will have a significant down payment at that time as you are concern with 401k. Maybe advise what is your mortgage payment? Are you getting help from your folks on monthly payment or all on your shoulderS?

Use all additional funds to pay down debt - CC 1st (as they have higher interest rate) and student loans second. IF you have the choice of going out on Friday and spending $100 on drinks/food - spend that money to pay your credit card and eat a meal at home watching TV. And Saturday nt the same thing - watch SNL vs. $100 tab at dinner. You will be MUCH happier to make the sacrifice now vs. wait until you get married and have so much debt you can't overcome.

As you make a good chunk of change - you might wish to rebudget your life so you can live on 1 paycheck per month and use the other EXCLUSIVELY to pay your bills! It won't be easy but the results are great.

My only advice is be a spendin fool

Thank you for the replies so far, I have one further question in regards to the credit score. I was under the assumption once I pay off all my debt by end of 2013 I was expecting my score to shoot up. Will that not be the case?

Quote from chyamor : Thank you for the replies so far, I have one further question in regards to the credit score. I was under the assumption once I pay off all my debt by end of 2013 I was expecting my score to shoot up. Will that not be the case?

Your score should go up slowly as you pay off the debt. It's not going to be an overnight change from 600 to 700. Very easy to damage your score, but it takes time to fix it. How high it goes will depend on other factors as well. But as you lower your debt utilization, as you make payments on time, and as your age of accounts gets longer, your score will go up bit by bit.

Credit can go down quickly but go up slowly! If you look at a credit report it goes back a few years and any red blemish remains for years and the first thing someone looks at if reviewing your credit report.


You rebuild your credit score via the following steps:

• Pay your monthly minimum on time EVERY month (NO EXCEPTION)
• Reduce your loan to balance so if you have a credit card with 10k available and using 9k - you want to pay that down so you have more credit available.
• Don't close any accounts (unless you have an annual fee). This establishes long term customer with history.
• Don't establish new credit until you have paid down the above and credit score improves as too many inquiries which may get decline will not increase your score (this goes back to shopping for a new car).

pay off loans and credit card

Some of these suggestions are going to be repeats:

Congratulations on the job, but don't fall into a false sense of security too quickly. Build up an emergency fund.

I'd reduce what you're putting into the 401k to equal whatever your company matches. If they match up to 10%, then leave it as is.

Between the student loans and the CC debt, pay off whichever has the highest interest rate (probably the CC) ASAP while making minimum payments on the other debt until the higher interest debt is gone.

Definitely look into refinancing the home to lower the payment. See HARP [wikipedia.org],

do everything in your power to get rid of the credit card debt. make it your apollo 13 mission. just figure out a way to land on that credit card debt free moon.

he should get married, don't couples get tax break/

Forget about your 401K and you credit score and knock down your CC debt. Everything extra goes to the bank. Sorry, you ran it up...now it's time to pay up.

Then work on your student loans. Draw up an amortization table and work the figures.

If you're debt free by the time your vehicle shits out, then pay cash for another one.

Don't take on any new debt.

Congrats on getting a well paying job. Be thankful you got that locked up. Solution to all your problems...keep working hard, and keep moving up in your field.