Financial dilemma question.

[Circle_10]

So, I don't normally post about my personal business on the forum, but I have kinda gotten myself into a financial problem here and just wanted to get some general opinions about my potential course of action. I'm just going to speak in general terms here without going into the specific dollar amounts.

Just for the sake of establishing some background here:. Im currently 37 years old. In October of 2016 I closed on my first house. I had joked at the time that it was a risky period to be buying a home what with my union's contract negotiations happening a month later in November, however typically our negotiations basically just maintained the status quo, and after ten years of living in an apartment I desperately wanted my own house. Apartment living was becoming intolerable for a variety of reasons.
Well, of course, our contract negotiations ended up going very badly for my union, and we all took a significant pay cut (Equivalent to about a quarter of my yearly income). And now I had a mortgage for a house that I had bought based on my previous income, I can still afford the house but not as easily as I could before (While house shopping, I made a conscious decision that I did not want to live paycheck to paycheck because every cent I earned was going to my mortgage, so I deliberately chose a smaller, lower priced home). My mortgage payments auto-deduct from a savings account, a certain amount of money goes in every month via direct deposit and every month a broadly equivalent amount of money goes out to pay the mortgage. Up until August of 2016 my car payments came out of that account too, but I paid my car off two months before taking on the mortgage. Otherwise I don't really touch this account and the amount of money in there has remained at more or less the same level since I closed on the house. Aside from the mortgage payments, and my car payments back when I had those, that account is "emergency money" that I generally just leave alone.
Meanwhile, with my reduced income I found myself relying on my credit card more than I ever had before because I was attempting to maintain a lifestyle similar to what I had for the ten years prior to my sudden pay cut.
My monthly minimum payments on the card are now becoming burdensome, and the other day it finally sunk in just how much debt I've racked up on that card - equivalent to about half of what is in my savings account.
I've begun debating taking 25% to 50% of the balance of that savings account and wiping out 50% to 100% of the credit card debt, then once that's done take the difference of what I had been paying in monthly minimum CC payments and via direct deposit adding that amount to the money that is already going into that savings account every week, which would start replacing the money I robbed from it (albeit very slowly, like over the course of several years).

Meanwhile, going forward, I'd be trying to conduct myself more responsibly with regard to my credit card, and accept that life is different now and I just don't have the income that I used to have.

So does this sound like the best of a bunch of bad options? Or should I leave the savings account untouched and just keep chipping away at my CC debt via minimum payments?

Right now, I'm leaning toward robbing the account, paying either a significant portion of my credit card debt, or all of it, and starting over fresh, and trying to budget better and not letting this happen again. but I'm curious if it's a particularly risky or stupid idea to draw my savings down in this way. (It's obviously risky and stupid, but I mean is it riskier and stupider in comparison to what I'm currently doing?)
The idea of cutting my account balance down by that much kinda makes me sick, but so does my credit card debt.

[Leaveammoforme]

While not a financial advisor by any stretch of the imagination... I have BTDT.

---Snip---

The only reason I lay all this out is for you to realize the stress that may be headed your way. Pay off that card.

[MegademiC]

I would do half like you said.

Paying minimums will take forever and youll get bent over the interest.
On the otherhand, draining you account leaves no emergency $. A 6mo coverage of absolute essentials or enough to buy a used but reliable car are what i personally do not like to fall below.

Try to put a little extra on each month as well. Even $10 will save you a bit in the long run.

Not a pro, but I lived tight for a few years and am paying iff a few loans right now.

[Honu]

Depends on equity in home
Is it in a nice area or ok can you sell and buy something less
Or is it already about a low of area ya want to go

I would pay off the cards for sure cut out any all extra spending etc...
Buckle down get tight

Build back up

But imho don’t do what any of us say talk to someone who can help and knows all sides of where you are at

[Circle_10]

While not a financial advisor by any stretch of the imagination... I have BTDT.
.

Wow, you weren't kidding. that's certainly frightening. An absolute nightmare scenario.

Yeah, I'm leaning pretty hard toward doing a lump sum payment on that card. I guess right now the question whether I pay half, three-quarters or so, or all if it. Even if I pay the whole card balance I would still have somewhat of a financial cushion left in the account, just not as good of one as I'd prefer.
I guess I should feel fortunate that it's even within my means to get out from under the debt this quickly if need be. I also feel like if I don't take some kind of drastic action now, the situation may deteriorate in another couple years or so to the point where resolving it on my own like this will no longer be feasible.

[thepatriot2705]

Do you have multiple credit cards?
Are you getting a decent tax refund this year?

[Circle_10]

Depends on equity in home
Is it in a nice area or ok can you sell and buy something less
Or is it already about a low of area ya want to go

I would pay off the cards for sure cut out any all extra spending etc...
Buckle down get tight

Build back up

But imho don’t do what any of us say talk to someone who can help and knows all sides of where you are at

I'm not likely to get a cheaper house that's move-in ready in the vicinity of my job for substantially less than what my current house cost me. I deliberately kinda went with the "economy" route on the house, and got something decent, but small, because with no kids and none planned I didn't have much in the way of space requirements. It's still affordable for me, I can't imagine anything else being much cheaper short of going back to renting again, but taking that pay cut in 2016 really tightened things up.

[Circle_10]

Do you have multiple credit cards?
Are you getting a decent tax refund this year?

Just the one credit card. I got my refund in February and it's already been spent on some items for the house.

[horseman234]

I'm a non-practicing CPA. Payoff the cards, starting with the highest interest card, and in the future, try to pay the outstanding balance in full every month, unless you are unable to in the case of an emergency. In general, paying interest is a bad idea unless the asset you bought with the borrowed funds is returning a greater return than the amount of interest paid. Unfortunately most of us have to borrow in the case of larger items such as homes, vehicles, and for emergencies. Try to live frugally now, save, and you will have a brighter financial future. That is easy to say, but harder to do.

Ed Latimore recently said the following which I found pretty much sums up how we should live:

"Put yourself through difficult trials now or life will do it for you eventually. And when life does it, it's going to be with the greatest intensity at the worst possible moment."
"The longer you avoid voluntary discomfort, the longer you'll have to endure mandatory suffering."

[Watrdawg]

I'm a mortgage person and have seen this happen many times. As others here have said pay off the credit card completely and shut it down. Pay cash for everything after that. Once you have paid the card off then start putting money back into your savings. Try to get to at least 6 months of reserves and then you can relax up a bit. Until that point forget about the extra's. You said you were trying to maintain your lifestyle before the contract cuts. Unfortunately that is no longer so you have to scale back to where you are now. Depending upon what your employment skills are you may want to start looking for better employment with higher wages. Just a thought. I'm kind of a Dave Ramsey person when it comes to finances. Over the years my wife and I have completely paid off all of our debt and we just have the house payment now. That will be gone in 8 years and we definitely have no plans to relocate. We started paying off the smallest balance card and worked out way up from there. We had kids through all of this and never went out to restaurants. Cheaper to eat at home and the meals were healthier. Took about 4-5 years to pay off a good bit of debt. Wasn't easy but we did it. You have it easier without kids and sounds like you have the means to pay off the credit card and just have a house payment already. I guaranty you that if you get to where you only have the house payment the stress will be dramatically less. Budget yourself out on paper and you will discover funds you were wasting that you didn't realize you were.