Paying off loans/debt

aneubaue

H and I are currently in the process of deciding what student loans and/or other debt we want to pay off first (so where do we want to make sure to put extra money every month while continuing to pay on all our other loans).  This made me curious as to how others are working to pay of different debts.  For example, are you focusing on the largest balances or the largest interest rates? Why?  Currently I think our plan is to look at interest rates, but we're still in debate.  Our goal is to have a decent amount paid off before we start TTC!

Kfudge0714

H and I are currently working on paying off credit card debt. Well mostly H is... he is a spender and got a little out of control last winter! He only has 2 credit cards and one is at 0% right now so we are working on getting rid of the one that's accuring interest right now.

For Student loans I would pay them off in this order: private, unsubsidized federal and susidized federal. Private usually tend to be your highest insterest rate followed by unsub then sub.

 

AppleJam+PB

Our plan for my student loans (H doesn't have any) is to look at highest interest rates first, BUT to consider our savings and occasionally make the decision to just pay off a particular loan altogether.  For example, I have a couple of federal loans through one company, and the rest of my loans are through another.  When those two federal loans get paid down a little more, we'll just pay them off in full one month before turning back to focus on the higher interest rates.  

 Also, I have heard of people who believe that paying off loans faster than the minimum payments will hurt your credit score.  This is NOT TRUE.  What actually happens is that you just get fewer "good" marks for on-time payments.  Ultimately, in my opinion, I'd rather be out from under the debt than keep it around just for the sake of raising my credit score. 

mrsodonnell12

We do the Dave Ramsey snowball method.... focus on the smallest debt... while making minimum payments on other debt.... once the smallest debt is paid, take that money and put it toward the next smallest debt.

aneubaue

mrsodonnell12:

We do the Dave Ramsey snowball method.... focus on the smallest debt... while making minimum payments on other debt.... once the smallest debt is paid, take that money and put it toward the next smallest debt.

 Any recommended site or book or anything else to learn more about this?  I have heard this method mentioned more than once and what you said about focusing on the smallest debt makes sense, I just wanted to look into it a bit more and was hoping you might have a recommendation as to where to get more info.  

Thanks! 

Zimsgirl

I'm still in School so I'm not paying it yet. I pay my car payment then I'll pay for school when I graduate. I have to start paying like 6 months after

mrsodonnell12

I would buy his book: http://www.amazon.com/The-Total-Money-Makeover-Financial/dp/159555078X/ref=sr_1_1?ie=UTF8&qid=1345218216&sr=8-1&keywords=dave+ramsey

 

Ash61612

mrsodonnell12:

We do the Dave Ramsey snowball method.... focus on the smallest debt... while making minimum payments on other debt.... once the smallest debt is paid, take that money and put it toward the next smallest debt.

 I just paid off a small credit card balance with my security deposit from my apartment this morning and am planning on using the money I was paying on that credit card and applying it to another credit card. glad to know the fancy term for it now

mrsodonnell12

Ash61612:

mrsodonnell12:

We do the Dave Ramsey snowball method.... focus on the smallest debt... while making minimum payments on other debt.... once the smallest debt is paid, take that money and put it toward the next smallest debt.

 I just paid off a small credit card balance with my security deposit from my apartment this morning and am planning on using the money I was paying on that credit card and applying it to another credit card. glad to know the fancy term for it now

Nice work Ashley! I cant wait to sell my house so we can actually start applying the Dave Ramsey principals..... sheesh... money is tight with 2 mortgages!

L&J2012

H knows more about this than me, but I'll try to explain.

I'm the only one with student loan debt. All my income goes towards student loans and car payments. We're paying based upon interest rate, highest to lowest. My two biggest loans are actually the lowest out of all of them so they will be last. I'm almost done paying off my Stafford loans, and then I will start working on Perkins (grace period ends today, actually, so first payment is due next month). 

 Once we get down to my two private loans with the lowest monthly payment, we'll just continue to pay minimum payments on them, since the interest is less than a mortgage's interest. The money that was going towards the other loans will be put towards a down payment for a house that we're building in 2014. 

I had just over $100k in debt and all but about $25k will be paid off sometime next year. Oh, and I just finished school in November 2011.

Mind you, my H is an accountant and without him I'd be struggling haha. I still don't really understand some of it... He just has me log into the website and sets up a payment.  

micheller630

L&J2012:

H knows more about this than me, but I'll try to explain.

I'm the only one with student loan debt. All my income goes towards student loans and car payments. We're paying based upon interest rate, highest to lowest. My two biggest loans are actually the lowest out of all of them so they will be last. I'm almost done paying off my Stafford loans, and then I will start working on Perkins (grace period ends today, actually, so first payment is due next month). 

 Once we get down to my two private loans with the lowest monthly payment, we'll just continue to pay minimum payments on them, since the interest is less than a mortgage's interest. The money that was going towards the other loans will be put towards a down payment for a house that we're building in 2014. 

I had just over $100k in debt and all but about $25k will be paid off sometime next year. Oh, and I just finished school in November 2011.

Mind you, my H is an accountant and without him I'd be struggling haha. I still don't really understand some of it... He just has me log into the website and sets up a payment.  

You're so lucky!  I also have just over $100K in student loans, but I finished school in May 2011 and am nowhere close to $25K left!  Only half my salary goes to paying them though, the other half goes into our joint account for joint expenses.  I'd LOVE to put my entire salary to them but I'd feel bad making DH pay for every single other thing on his own.

Right now I'm just making minimum payments on everything because my minimum payments are actually over half my salary that goes into the account I use for loan payments.  I pay a small $40/month loan out of our joint account.  I was overpaying when I had some savings to do so, but it turned out that it was just applying towards my next payment, not going towards the principle.  If I have extra money at any point in the future I'll be sure to check off the option to lower the principle, that's the key to paying down your debt earlier.

MMRoberts11

I usually do a comparison and see which would save me more money in the long run and go with it. 

Try to pay off slightly more than the minimum each time.  Even $20 extra will make a difference.  If it's credit card debt, start paying off any cards that are close to the limit; it will help your credit score. 

MrsJWoodJr

I Just started getting the bills to pay them off. so right now H and I were having the very same discussion last night. We want to pay off the smallest debt with the highest interest rates first.