Penny Pinching

by yourbabywilliams

Review on Penny Pinching

Are you knee deep in credit card debt? You must have been intrigued by the idea of selling off your stocks to pay off credit card debt. But the question lies as to should you sell off your stocks to pay off your credit card debt? That's the question most people ask themselves while they're drowned in an ocean of debt. 'How do I consolidate my debts' is the most common question asked by debtors and as they look for answers to this question, selling off stocks comes as an option. You should never borrow money to invest it in the stocks. Since stock trading is a risky field, it must be done with utmost care and consideration. Have a look at the things that you should consider before selling off your stocks to pay off credit card debts.

1. Consider the tax benefits: Selling off the stocks that you have been holding for a long time can adversely affect your tax burden. As the stocks that you have been holding are long term stocks, thus, they must have appreciated with time. Selling them off and earning huge yields to pay off your credit card debts can be tempting, but you also have to keep in mind that this money will be treated as an income and it will be subject to tax. If you can manage paying off your hefty tax burden, you can go for selling off your long term stocks.

2. Interest rates: Just after taxes, the next thing that you should consider is the interest rates. If you could refinance your debt at a comparatively lower interest rate, may be lower than 5%, then that would be a preferable option over selling off your stocks. While you leave your stocks to appreciate with time, you can refinance your debt by transferring it to a low interest rate card. If you do not have access to such low interest rate cards, go for selling your stocks.

3. Your convenience: You also have to look into your convenience. If the question 'How do I consolidate my debts' is bothering you, you must have thought about taking out a home equity loan. But if you do not have enough equity accumulated in your house, you can apply for an increase in your credit line to transfer the entire balance to a low interest credit card. If you can pay off your credit cards better through a 0% interest rate card, you will pay less on interest rate while the whole transaction will be completed within a few minutes.

Thus, if you're wondering about 'How do I consolidate my debts' check out the other options like transferring your balance to a low interest card or even by taking out a home equity loan. If you do not get desired results, only then go for selling off your stocks to pay off credit card debts.

em>Betty Williams is a regular writer for various finance related blogs including penny pinching. She is a PG degree holder from Leeds University in Marketing and Finance and right now working in a reputed bank as a relationship manager. She is well equipped to write articles on how to save money quickly and how to save money on everything.

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Created on Nov 11th 2010 05:45. Viewed 907 times.

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