debt help questions

mrskimm09 · December 2014

Hello.

We are about $4500 in debt between 6 cards. Whats the best way to go about paying them off. Im horrible with this kind of stuff. I understand to pay off the highest interest rate first? Then do you just not pay the others then? Is transfering balances to other cards helpful? I was going to try to transfer all debt to one card but that might be difficult to get such a high balance transfer amount.

Any advice is welcomed.

Thanks

noffgurl · December 2014

Personally, I wouldn't try transfering the blance(s) I would pay the smallest balance and snowball from there. I think pretty much everyone else will say to snowball from the highest interest rate to the lowest. I think the biggest point is making sure to pay at least the minimums on everything and have extra money working to pay them off quicker. If you haven't had any go to collections yet trust me don't stop paying the minimums.

hoffse · December 2014

This is what you do:

1) Stop using the cards for anything. Do NOT add to those balances.

2) Pay minimums on all of the cards so that none of the cards go to collections.

3) Then throw any extra money you have to each card, one card at a time. You can start with your lowest balance if you want to stay motivated. Or you can start with the highest interest rate if you want to save yourself a little money. Whichever you pick, make sure you stick with it.

4) Once the first card is paid off, add whatever you have been paying on that card to the second card. Then once the second card is paid off, add everything to the third card and so on. This is called a "snowball." By the time you get to the final card, you should be adding extra money from your cashflow plus all the minimums you were paying on the other cards. So you pay them off faster and faster as money frees up.

Also, figure out why you got into this situation in the first place. Is it a one-off problem that can be attributed to something that happened (ie: a medical emergency)? Or are you habitually in credit card debt? If it's the latter, then address this problem so it doesn't happen again.

Finally, post your budget here and we can help you identify areas where you can cut back to pay this debt off faster.

lifeonthehill · December 2014

I would take the smallest balance and pay that off first and work your way up to the largest. Small victories were a HUGE deal to H and I when we were paying off all of his student loans.

I may not agree with everything Dave Ramsey says but he was a life saver for H and I. Try looking him up and maybe buying The Total Money Makeover on amazon or something.

Also post your debts with interest rates here and people will be able to give suggestions using that as well.

Good Luck!

Wulfgar · December 2014

According to studies, you tend to pay roughly the same amount of interest whether you pay the highest interest first or the smallest balance first and snowball upwards. If I am also correct, the time to pay them off is close.

To do this though you have to pay only the minimum to all others while tackling the one that you want to focus on.

It helps to have an emergency fund at least a large as your health insurance deductible prior to doing this so you have money for emergencies.

Sisugal · December 2014

ALWAYS pay at least the minimums on ALL of the cards to keep them from going to collections . After that ADD every dollar you can find to one card (either the highest balance or highest interest).
STOP using the cards - just STOP while paying down debt. Cut back on your budget to find more $$. Sell items you no longer use or use and add to the balance. Take on a second PT job and add the income to the debt.

brij2006 · December 2014

Cut up the cards!!!

Then pay minimums on all of them, but start with the smallest card first and put extra $$ toward that one each month. Once that one is paid off, add that minimum payment to your extra payments you were making and start paying off the one with the next highest balance. Continue to snowball those payments onto the next card until they are all cleared up.

Also, in the meantime cut out anything extra from your budget. $4,500 isn't that much debt, and you can definitely get it under control quickly.

mrskimm09 · December 2014

Thank you everyone who commented. We have cut up the cards. I lost my job so it all halted and came to a head with finances. Im still looking but have a few leads.

Erikan73 · December 2014

I'm with the other pp to at least keep paying the minimum on all cards. I would probably work on the ones with the smallest debts first to get rid for them faster. Sorry to hear about you losing your job. Hopefully you'll find something soon.

mrskimm09 · December 2014

Thanks @Erikan73 !

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