The BA Q&A: $60,000 In Credit Card Debt!

us at brand Ambition Podcast. Through the website. You can find out how to find us on Instagram through the website, so bronambitionpodcast dot com. I cannot wait to get your questions anything career of money. I am your girl and thank y'all again for the continued support. What else is happening in my world? Y'all know I'm coming up on a year of Mandy money. I can't believe it. Oh man, it's almost been a year. I gotta figure out how

to plan a party. If y'all have any ideas of how to celebrate a year in business, just let me know, because my my deep you know, Leo Hart here the lion wants to dance. Okay, I want a party. I love an affair. I love to have a good time. So I'm just thinking back on a year in business. It's tax season right now, and for any entrepreneurs out there who are like sweating it, you know, first quarter taxes and then closing out taxes for last year. My

accountant is my secret weapon. And I'm not even going to sit here and pretend like I know a bunch of stuff and can and give lots of advice on how to, you know, manage your taxes this time of year. But my biggest piece of advice is to don't stick her head in the sand. Actually go ahead and hire someone. It is worth the money, not only to find an accountant,

but also to find a bookkeeper. Even in the first quarter of this year, I didn't think I did anything that funky, But when I tell you, my bookkeeper had about twelve thirteen different questions for me to answer and line items and my expenses and my income to figure out. Oh my goodness. So I'm so glad I'm getting on top of that. Where did I find my bookkeeper and my accountant? I asked a friend. I asked a fellow business owner, you know, where do you do your taxes?

And I asked someone local so that I could find someone local, and fortunately I interviewed them both and their husband and wife duo, and they are fabulous. So if you're someone who's whether you've just launched a business or you've been in business for a couple of years, I'm talking to you, nubie entrepreneurs like myself, go ahead and

outsource that and get some help. It makes me feel so much more at ease, and it makes me not fear that I'm going to have a nasty letter from the Irs hitting my mailbox any day now telling me that I owe them eleveny million dollars. Okay, so happy tax season to all of y'all. Also, my goodness, it's been almost a year in business, and y'all know, when I started Mandy Money, I created my own website myself. Squarespace is a sponsor of the podcast, but even before

they became a sponsor, I was a fan. I used Squarespace to create mymandymoney dot com website, and I have to let y'all know there is a whole newmandymoney dot com for y'all to check out. You can check it out mandymoney dot com. It's Mandy with an I. I partnered with the same badass web designer who did the new brand Ambition podcast dot com. Her name is Shirleyansley. She is amazing black woman, mama partner in crime for me. Now, for all my website needs check out, I'll put a

link to her website in our show notes. And I told Shirley I was going to do it, and I was like, you're probably not prepared for lots and lots of people to want to work with you. I think she's already sold out and booked for the next few months. But she deserves all of her success. She's great at what she does, and as a fellow mom and entrepreneur, I gotta support my girl, Shirley. So I will put a link to her website. She is phenomenal and I'm so happy with the new look at mandymoney dot com.

All right, Well, with that being said, let me get on into the inbox and see what kind of questions y'all have today. All right, so today's show is going to be all about money, honey. Our first question comes from an anonymous listener who had the courtesy of giving me her own pseudonym, and I'm a fan Balance transfer Bell. Hello,

balance transfer Bell, let's talk. My question is, with interest rates going up now that the FED is working on inflation, should I lock in the zero percent balance transfer rates that my credit cards are offering with a three percent transfer fee or wait until the next offer comes along. Here's some context. I've been for the last two years rolling over approximately sixty thousand dollars of debt on credit cards. I have been under employed during COVID and in a

precarious living situation. In order to keep all those plates spinning, I decided it was better to borrow the money from myself and deal with the three percent balance transfer fees and make sure all my bills like student loans, card notes, rent were paid on time. As a result, my credit isn't great because my balance to limit ratio are high, but I have zero issue paying my bills on time.

I've been doing this now for two years, and I honestly believe this is the year when I'm finally going to get a decent job and be able to pay down this loan. But a few additional things about this sixty K worth of credit card debt that I have been rolling along, so they're spread against different cards, and they all have different terms that are up at different times. I know I need to move the money before those terms expire so I don't get hit with additional interest.

But the offers come when they come, so there's no guarantee that a new zero percent balance transfer offer will come in time. Also, I should let you know that I put a large amount of money that I had sitting in savings in the stock market. I didn't need to use all the money, but I wanted to make sure I could make my minimum payments and have an emergency fund. I want to leave that money in the

market in order to not take a loss. I know it's a lot, but I want to leave my money in the market, invest and pay off these loans in the next year and a half. But I want to know if the next balance transfer offer that pops up overlaps with my zero percent offer, should I jump at it, because even with the added cost of a balance transfer fee, it could be a safer bet since rates are finally rising.

Let me know what you think. I appreciate all that you do, oh Man, Balance transfer bell, this is a doozy. So sixty thousand dollars worth a credit card debt, you know, I got to give you major props because you actually took advantage of a very useful tool via a zero percent balance transfer offer, to keep that sixty k from spiraling out of control. It's a lot of credit card debt, and because it's spread across different cards, it's still a lot to juggle. Yeah, to keep up with those term

expiration dates. I hope you're reading the fine print because you could get a hit with additional interest fees, but you can also have deferred interest clause, which would actually go all the way back to the beginning and when you open those credit cards and smack all that interest onto your balance, so it would be like you were paying interest all along. So you're left not only with those interest charges, but also way more debt than you

actually started off with. My biggest concern, and my question is have you actually been making payments on these credit cards or just shuffling them around, Because shuffling them around is savvy, but if you're not actually putting a dent in them, then you're really just kicking the can down the road and you're creating more stress on yourself, and like you said, it's stopping you from being able to, you know, make investing and saving decisions that could really

build help build you wealth in the future. I'm fearful that if you don't start tackling this sixty thousand dollars worth of debt, that it will get to the point where you kind of reach your balance transfer cliff. I mean, there are some you know, balance transfers are not a total panacea for credit card debt, right, So there's a couple of limitations. One, you typically cannot transfer a balance from a credit card at a certain bank to the

same bank. So that means if you've got ten dollars on a Chase credit card, even if Chase has a zero percent balance transfer offer, you can't transfer that balance onto a Chase credit card. You have to go to another issue or bank and find a zero percent balance transfer offer from them. There also may be limitations on how often you can transfer balances, you know, at one bank to the other. So definitely want to read that fine print. You've put a bunch of money into the market,

and I get what you're saying. You know, you don't want to take it out. You don't want to lose and miss out on those gains. And I think that that is, you know, it makes a lot of sense. But the fact that you were able to invest in the market tells me that you've got extra money and extra funds that you could be using to pay down

this credit card debt. So I would think a little bit differently about how much money you're putting toward your investments and instead start siphoning some of that money to your credit card debt. That's sixty K. Like I said, you're managing it right now, but it's like spinning plates, and you keep not only spinning plates, but you're like doing it on your tippy toes. And then you're going to try to like lift one foot off the floor and you're just making it. It's getting harder and harder.

Then you're going to be like, oh, I can do it, but I can put one hand behind my back. Eventually it's all going to come crashing down. So that's why I want you to come up with a plan that lets you put additional funds toward that debt. Now I know that this is brown ambition, and we talk about

the importance of investing and wealth building. Sure, but I don't want you to lose sight of that credit card debt, because honestly, paying down debt can also be a form of investing, especially if that debt is going to be costing you or has the potential to be costing you

down the line. So maybe what you could be doing while you're enjoying the remaining terms of your zero percent balance transfer options that you've got is to start creating a bit of a cash nest eck that you can use to start paying down those credit cards sooner rather than later. And maybe whatever you've put into the stock market so far, you kind of let that sit, and you say, cool, I put this wind far into the stock market. I'm going to let that rock and I'm

not going to touch it. That's fine, but you've got to throw everything you've got left at these credit cards. Now. You talk about zero percent balance transfers also not always coming around every day of the week. While it's true, especially if banks know, and they always have a way of knowing, don't they. If you're someone who's likely to take advantage of balance transfer offers, I imagine you get a lot of those offers in your email or in

your old snail mail through the mailbox. That being said, you don't always have to wait for an offer to come across your you know, your inbox in order to take advantage. You can actually use sites like nerd. While at Magnify money, just do a quick Google search to see what banks out there are offering zero percent balance transfer cards right now, and you can take advantage of those,

you know, if you qualify. I'm actually really impressed that you say you've managed to maintain such a high credit score even though you're maintaining pretty high balances. And that's probably due to the fact that, like you said, you haven't been missing payments because you've been set enough to take all those spinning plates and move them around strategically to different, various zero percent balance transfer options. That's super savvy.

But how long can you keep that up? Sure, if you see a zero percent balance transfer offer and it's going to give you and buy you more time, and it's a smart way to you know, offload some of that debt and save you what interest, even though you are, like you said, paying a balance transfer fee. Okay, fine, but what are you really going to be doing in

the long term? Like, what's the long term strategy. I am so excited and I'm hopeful too that you'll find a job that's going to increase your income to help you pay down that debt. I really hope that happens. But if it doesn't, or let's say you even do get that job, but you're not able to put as much as you want toward your debt, what are the sources of income can you be bringing in? You know, are there any ways that you can be freelancing or

bringing an additional income to help tackle that debt? And if a balance transfer doesn't sound like something that you can keep up for much longer, you could consider taking on a debt consolidation loan at a credit union or an online lender. Yes, it's not the juicy zero percent interest offer that you may get from credit cards, but it gives you more peace of mind because it's a fixed interest rate loan, meaning it's not going to go up.

You mentioned the FED has been raising rates to combat inflation, which it does. That's the whole point of the FED, which means that credit card debt and other types of loans can get more expensive, So it can be nice to lock in a fixed interest rate through a debt consolidation loan like a personal loan through a credit union or a lender, because at least then you know this rate is my rate. No matter what the FED does,

I'm going to get this juicy, great rate. And because you've got decent credit, you know your chances of getting one of the lower rates is fairly high. I mean, obviously I don't know all of your information, but let's just assume it is. So look into that fixed rate, fixed term personal loan. And by fixed term, I mean they're going to give you a loan and say you're going to owe this this your monthly payment for the next five to seven years or whatever the term of

your loan is. And then you always know what your monthly payment is going to be. And because it's a fixed rate loan, you know the rate is not going to change. So as much as balance transfer cards are a good option, they are a band aid, and I think a long term debt payoff solution like a debt consolidation loan can make some sense. But because balance transfers are so good and you got your zero percent offer, hey, you've already proven that you can multitask like no other

like women are freaking amazing at multitasking. I just know there's a lot of men out there who probably couldn't not to it. I know men are not a monolith, but to manage all those different cards and all those different term limits and balance transfer offers like that is

no small feat. So you know, I commend you for that, and I say, as long as you can keep it going and you're not, you know, losing sleep and your eyes are not spinning out of your head, you know, continue taking advantage of those zero percent balance transfer offers. As long as you can get them, you can qualify them. But when it starts to look like you're gonna need a way to help pay off some of this debt beyond balance transfers, you know, consider a debt consolidation loan.

Consider starting a relationship with a credit union that will also help improve your credit. I know you said your credit's pretty decent, but with your high utilization rates on credit cards, you know, that's a double whammy for your credit score. Not only is a high utilization gonna diminish your credit score because it's like the second biggest factor of your credit score, that high utilization rate, but it's

the types of debt that you have too. It's the revolving credit card debt, and credit scoring models tend to favor installment loans, which like a debt consolidation loan, that's an installment loan versus high interests revolving credit cards. So something to think about as well for the long term. But in the meantime, you're kind of a I'm gonna change your name from balance Transfer Bell to balance transfer Badass. Okay, thank you so much for sharing your question. That was

a juicy one. Let me take a quick break. I will be right back with more of your question. Hey, hey, all right, I am back with another credit score question. I love them. Keep them coming, y'all. Brandimissionpodcast dot com send us all of your questions. Another listener who'd like to remain anonymous, I'm gonna call her. We had balance Transfer Bell slash balance Transfer Badass, so I'm gonna call her Credit Queen, Credit Queen. Hello, thank you for your question.

Credit Queen says, I am paying down my debt and I've paid down twenty thousand dollars with high interest credit card debt. Woho, that is amazing. I'm about to tackle the highest balance I have yet, thirty four thousand dollars on a credit card with a thirty eight thousand dollars credit limit. Yikes. Overall, my credit utilization rate is sixty percent with all the other open credit lines that I have. Again,

all the other credit cards are down to zero. This is the last one I have left, thirty four K on a thirty eight K credit limit card. My question is should I close down this very high balance card and with a high credit livet. I've already cut up the card. I'm working on my money habits and my plan so that I'm no longer putting expenses on credit. But with closing the card, affect my credit or make it better since my credit utilization will technically be better,

I'm paying off this card. I've never been laid on the payments. Also, I think I want to look into taking a personal loan to pay it off with a better interest rate and then close the card. Thanks for your help, ooh, this is a perfect combo question to go along with our question in the first half of the show. First and foremost, congratulations, paying down twenty thousand dollars of high interest credit card debt is no small feed so I am giving you all the snaps, my friend,

all right, quit credit queen. So you got thirty four K and a thirty eight K credit card. The fact that you know enough to understand how to calculate your credit utilization rate tells me I am not dealing with a newbie here. You actually know something about how credit scores are determined and how power they can be. So absolutely, having such a high balance on this credit card could

really be hurting your credit score. I mean, you have almost one hundred percent balance used on one credit card, but you have saved yourself from having terrible credit, it

looks like, by having additional lines of credit. So the benefit, while we're seeing here from this your own example, is the benefit of keeping credit cards open, because if you had closed down those other credit cards as you pay them off, then you'd be left with like a ninety nine percent utilization rate right now, and your credit score would totally tank, because that is the second most important scoring factor apart from making on time payments, which is

great to hear that you've been doing that as well, but utilization rate is the second biggest reason, or second biggest factor in determining your credit score. Now because of those other lines of credit. Like you said, that thirty four k is actually only sixty percent of your total credit limit across all your credit cards, which is really

savvy to understand. That's because credit scoring models, when they determine utilization rate, they're not just looking at the utilization rate per individual card, but they're adding up the total available limit across all your credit cards and then adding up the total balance across all your cards, and that's how they're getting to utilization rate. Okay, so you've already proven by your own example the power and the positive

side of keeping credit cards open. What will happen if you were to pay off this thirty four k and then cut up that and get rid of and close that thirty eight thousand dollars line of credit is that it could make it more difficult for you to maintain a low utilization rate in the future, right, so you

won't have that quote unquote. It's hard to call a big fat credit limit a safety net because really it's almost like it's like, I don't know, it's like putting a for me as a as a person who struggles with like eating and eating, you know, binge eating Sometimes like It's like putting a big bag of potato chips next to me after a long day of work and kind of expecting me to not devour the entire thing in five minutes. Right, So it's a tempting line of credit.

It's like, oh, use me, I'm here. You can't afford it, Oh, just put it on this thirty eight thousand dollars credit limit. It's just it's thirty eight thousand dollars. What's a couple

thousand dollars? You know, So it's tempting you. But what's crucial to me that you've said in your question is that you're actually working on your money mindset and building smarter habits so that you won't put things on credit if you trust yourself, and only you can answer this, Okay, credit queen, Only you can decide if you trust yourself enough to keep that credit line open because you know it'll help you with the utilization rate, and you know

that you know you'd like to have a longer credit history because the length and age of your credit is also a small but powerful factor in your overall credit score. And you know that, and you're like, I'm going to keep this open because it's actually benefiting me to have it open. However, you know yourself very well, well, you know how you racked up all this credit debt in the first place. I know you say you're, you know, putting some new mindsets in place and trying to you know,

get your spending under control and all of that. But at the first sign that you feel tempted to start using that line, you know, you may want to go against what logic and reason says and actually close the card.

I have let myself credit cards close if I felt like I was going to be tempted to use them, and if I felt like I had enough of a credit limit across other cards that yeah, it was going to decrease my overall credit limit, but I still had other cards that I could lean on, and I wasn't going to be, you know, messing myself up too, too terribly badly. So sometimes it's okay to let your credit cards close. I'm just going to go out there and

say it, because conventional wisdom and logic and reasoning. This is why they call it personal finance. You know, sure, there's the right or quote unquote the right thing to do and the logical thing to do, but you also have to know your personality and your approach to money, and what your triggers and your weaknesses are. This is the reason why I don't keep big bags of chips

in my house. You know why, because I know myself and all it takes is one bad day at work or one argument with my partner, and it's just like a bag of chip's gonna solve my problems, and I'm gonna feel like a sack of crap after, you know what I mean. So I know myself, right, I think you should get to know yourself too. Now it could be a case where you paid on the credit card, and let's be clear, you haven't paid it off yet, so let's not get too ahead of ourselves, like, just

focus on paying it down. But when you get to the point where you've paid it down, then you can kind of see yourself and you know, be real with yourself and say do I need this credit line? Are my other credit cards sufficient? Okay? Let me close it down. So what you can expect if you were to close it down is would you take a hit to your credit potentially A couple of reasons why we just talked

about them, right, you are immediately decreasing your total available limit. Now, the beauty of your situation is that those other credit cards you have have a zero balance. So even if you're going to close this card, your utilization rate should still be zero, right, so you're not actually hurting yourself. Where you might get dinged, and what you probably will get dinged is your average age of credit if that

credit card is one of your older accounts. So you can do a quick Actually, credit Karma has a cool tool for this. You can actually do a credit simulate, what's it called credit score a simulator, and you can actually see with you r if you load your credit accounts into there, you can see, well, what if I

close this one? What if I get a credit limit decrease or increase, And you could actually see what the effect could be to your score, and then you could see, okay, maybe it's like twenty thirty points whatever if my average age of credit is reduced by closing this card, but your credit score will bounce back. It is not like I said, It is not a like a stagnant sort of score. It's always moving and changing and flowing. You know,

It's a living, breathing thing. And as Tiffany always says, it's basically your g if you look back at all your credit history and your you know history, personal finance and loans and all that, it's a record you know from your whole credit life. So as long as on the whole you've been relatively on time, relatively you know, good behavior, then your credit score should always come back.

It should bounce back. So in your case, it may make sense for you to close that card and just be done with it and just put it in the past behind you, even if you take a temporary hit to your credit score. You have to do what works best for you. But honestly, this is like you're in the beautiful position I think of kind of obsessing over tiny details. But focus, focus, focus on paying that credit card balance down because that's still thirty four k. You

paid down twenty k, and that is amazing. You are a credit goddess, right and you have you are a paydown queen. But let's focus on getting that thirty four k paid down asp ACEP asap. So I wish you the best of luck. Thank you so much for your question to Brown Ambition. I wish you nothing but the best. Please follow up, like let me know how the credit card paydown is going. Let me know how you paid off that first twenty k cause I love to support

y'all and love to share all your different strategies. But congrats again. I think you're in a pretty good position to even be thinking about after I paid on the thirty four k. What am I gonna do? So keep keep going, all right? This was such a fun episode. Thank y'all for the questions again. Hit us up at brownambitionpodcast dot com. Send us your questions through ig. We are at Brian Ambison Podcast and I am Mandy Woodruff Santos. I'm at Mandy Muddy on Instagram and I cannot wait

to hear from you guys. See y'all next week. Hey ba fam, we could not do this show without your support or the support of our team behind the scenes. The Brown Ambition Podcast is produced by Cumulus Podcast Network. It's edited by the wonderful Emani Crosby and produced by Tanya Bustos. Dennistimplinsky is our in house tech guru, and I am Bandy Woodard Santos, your co host, and I will see y'all next week.