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I have $20,000 to pay off debt, which is my best option?

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We are going to build a new house. I have $20,000 in CC debt and my wife has $10,000 in CC debt. We have $20,000 cash available to pay down this debt.

My scores are 660-680 and my wifes are 650-670.

Senario #1:

I pay off all my debt and none of my wifes and my scores would jump to 755+

Senario #2

I pay off $15,000 of my debt and $5000 of my wifes and our scores would both be in into the low 700's.

Senario #3

Pay off $10,000 of my debt and $10,000 of my wifes. My score would be close to 700 and my wifes around 720.

What would be my best option?


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Personally, I would go with the option that gets your score over 750 (for the best rates) if the house were my only interest.

However, if using this whole wad of cash to deal with your debt only is going to put you guys in a position where wifey's 10K debt is going to keep growing (and perhaps become unmanageable), then, by all means, do NOT pick that option!!!! And income isn't the only factor to consider -- consider carefully what your living expenses will be in total after building this new house.

IOW, don't get yourself a nice mortgage rate at the expense of the rest of your financial life.

I would also consider going with one of the other options that pays down both of your debts -- and then wait a bit for your scores to increase before building the house. Those score increases you mention are just projections, which in the absence of new debt, will keep getting bigger with time. And consider asking for CLIs on some of your existing accounts to decrease your utilization.

Why don't you ask your lender what he/she thinks?

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Once these debts are gone we will only buy with cash. We have learned our lesson the hard way about credit cards.

We can afford the house as we live in Western N.Y. where the housing market has remained stable and houses are very affordable. As an example, the house we are building is 2600 square feet for $210,000 with very nice upgrades, lot included.

I will talk to the lender to see what they think.


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I'm in the samr boat and all I have to do is sell my house. I told my Realtor that I needed to make $40,000 off of the sale of my house so I could pay off $20,000 in debt, put down $10,000 on a new home and put the rest in savings. To me to be debt free is the best option because everything you own will be yours. Just don't rack those CC's up again or then you'll be in some trouble.....Good Luck :)

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