Should I Sell My Shares To Pay Down My Credit Cards ?

Here’s the story, back in January I had a little too much time on my hands. I was bored and looking for something interesting to do. One of my friends encouraged me to buy some speculative mining shares.

The first purchase was for $500 worth of company A. They have gone up about $50, the downside is that by the time I sell them I’ll have paid $60 in brokerage. I emptied my change jar to pay for these so it was no big deal. I don’t mind holding onto these ones for a little while and waiting to see what happens.

But then I got a little excited about “playing the market” and took a cash advance on one of my credit cards to buy $5000 worth of company B. The shares initially went up a little and I was all smiles. Then I went back to work and due to my lack of internet access at the office I missed them sliding below my purchase price. Being the eternal optomist (which is probably part of the reason I’m in so much debt) I decided to hang in there and wait for them to come back up.

And I waited and I waited and 5 months later they still aren’t above my purchase price. As I mentioned previously I’m down around $1000 and that the shares were in trading halt. Well today they resumed trading and my holding went up around $450. The decision I have to make is whether to get out now and accept the loss or wait and see if they go up any further.

When I take into account the interest I’ve paid and brokerage, if I get out now I’m still going to be down around $1000 down the tubes. Even if I take into account the tax deduction it’s going to put me $700 in the red.

The advantages of selling now and paying the money off my credit cards is that I’ll be saving around $70 a month in interest payments on my credit cards.

The disadvantage of holding the stock is that I think the stock has serious potential to go up a lot in the next 6-18 months and if I get out now then I’m going to miss out on a chance to put a serious dent in my credit card debt.

My third option is to place a stop loss order on the shares. That’s when you set an order in place to sell the shares if they drop below a certain price. If I set it a bit below what they traded at today then I’ve limited any further losses to a couple of hundred dollars less than what I’ve lost now.

At the moment I can’t decide what to do, I think I’ll sleep on it and hopefully wake up in the morning knowing what’s best for my credit cards.