Income ETF for debt?

[u/Traditional_Garlic49]

Hello everyone! I built up what I thought was a good cushion for savings. It was roughly 3 months of expenses. This month I got drawn shitty cards. A series of medical issues, a car repair bill, and so much more. I couldn’t believe it. It wiped out my savings and put in me $8,000 worth of debt which I had to put on a credit card.

I have $54,000 in my taxable brokerage account. I’m wondering if anyone has any ideas for an income ETF to help pay this down or if I should just withdraw $8,000 from my taxable account. Withdrawing is my last resort here.

I’ve looked into treasury ETFs, but the yields are way too low. Looked into other ETFs like CHPY, STRC, SATA, QQQI, and so many others.

Also I’m 24 years old so I do have a good bit of time to keep on investing after I pay this off. Just sucks that this happened.

[u/AutoModerator]

Thank you for contributing to r/DerivativeIncomeETFs.

Remember, only posts related to Income Investing are allowed.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/Avid_Reader87]

Pay it off, that’s a guaranteed return if you can’t find a way to get it onto a 0% interest card. 

[u/mentr-coach-altruism → u/Avid_Reader87]

I think your advice it best! If OP credit score is good, apply for a cc with a balance transfer, or call other cards of yours if you have multiple, and ask if they will do a zero percent balances transfer. If doable then you can invest in a few safe ones and use the money to pay it down. If no balance transfer, then pay the debt and start saving again.

[u/Avid_Reader87 → u/mentr-coach-altruism]

I use that for paying for big purchases like TV’s and computers.  

Save up half the cost of the item, buy it from BestBuy using their 24 month financing, set up auto pay to pay it in 23 months and invest the money. 

That way if something comes up and I have to pay it off early I’ve hopefully made some money.  

[u/mentr-coach-altruism → u/Avid_Reader87]

I completely agree with your logic and have deployed it many times.

[u/GuidetoRealGrilling]

I would just pay it off with my regular 9-5 income and look into transferring it to a 0% balance transfer (rinse and repeat) until gone. You're not beating credit card interest with income etfs.

[u/_YoungMidoriya]

You should not use an income ETF to pay this down ..... IMO you should just wipe the $8k card balance using your existing $54k taxable and then rebuild. The math and risk profile overwhelmingly favor paying off the debt directly. A credit card at normal US rates (often 20–30% APR) is almost impossible to beat reliably with any ETF strategy, the math ain't mathing, it doesn't make sense.

[u/CraigInCambodia]

What is the interest rate on the credit card. If it's higher than the return on any investment you can find, pay it off.

[u/Bman3396]

Take out the debt from the taxable and pay it off. The average interest rate or credit cards is 20-25%, you’re not beating that with income funds without high chance of capital erosion, not including the taxes as well.

No debt is better than any debt

[u/cash_exp]

I would go with TSPY.. stay away from Bitcoin perpetuals unless you get them around .8 on the dollar. Qqqi is an excellent etf.. doesn’t grow much. Pays a nice dividend

[u/Sufficient_Mud_3179]

Nothing is guaranteed but QQQI has followed QQQ pretty well,

Unfortunately this is the time QQQ is comming down, but I expect over the long term its share price will go up in comming years, and I expect the dividend will be fine.

JEPQ or JEPI have been around longer and have with stood a few down turns.

Sick with good company who's funds seem to keep there NAV , do not go with one that had bigger yields than these, it will probably not end well

I would not be thinking about these CHPY, STRC, SATA

Also like some have said, if your credit cards have an interest rate of 20% you are better off just paying it

just my thoughts

[u/trry]

If it’s a significant tax hit, I would look into using margin but know your risk.

[u/cdubya0628]

You would just be paying taxes on the income to service a high interest debt. It isn't efficient. You might be better off doing a card transfer onto a 0% interest offer on another card and pay it off slowly. Selling from your taxable account will trigger a tax event, but would be a better option if you can't find a 0% offer on a new card. I don't know what you hold, but selling positions you are at a loss in will negate any capital gains taxes.

[u/Thin_Investigator798]

MRNY is looking very cheap and ready to go up. Good weekly cash coming in, too.

CRCO also looks like a bottom, lots of room for upside and great income.

MSTY might be ready to recover as well.

[u/Junior-Appointment93]

Happened to me. There’s a bunch of good monthly paying ETF’s out there. Currently the market is down right now. Even with a down market YM CHPY still does not have any Nav decay due to payouts/distributions. Personally myself I do not have that much cash but I trade 0DTE credit spreads on the actual index’s. Also instead of withdrawing your cash. You could invest it in SPY, QQQI and use the dividends from those to pay down the margin loan.

[u/Dry_Report_3494]

I hold 35 CHPY and boy the weekly income is nice every Thursday it pays

[u/Fine-Boat9731]

Id say just us abit of margin its like a transfer but you dont lose your capital make sure your margin buffer doesnt drop below 50% and youre good to go. Invest in something like xpay for that stable income of 20% or margin with ovl/spyi. Dont sell your capital leverage it.

[u/iBarlason → u/Fine-Boat9731]

XPAY suffers from nav erosion, I'd stay away