Paying down credit card debt - Questions

[Anonymous]

I say that because you are wasting 5 minimum payments and going nowhere. On paper high Apr for saving money but it doesn't really. Small balances that are not introductory rate bleed money too. Pif them.

[niko79]

fordguy89, I just did that. Thanks for the insight.

[Anonymous]

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@Anonymous wrote:
I say that because you are wasting 5 minimum payments and going nowhere. On paper high Apr for saving money but it doesn't really. Small balances that are not introductory rate bleed money too. Pif them.

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Isn't this just simple math? Paying off a higher APR loan will save you money. Those 5 minimum payments aren't vanishing. They're paying down cheaper debt. I can understand the psychological affect of getting more cards with a $0 balance but that doesn't change the fact paying higher APR loans down faster WILL save you money all other things equal.

[Anonymous]

It will save you only a marginal difference in the long run. Pay off the cards with the small balances first. That is the best apporach for someone looking to pay off debt fastest, stay focused and on track, avoid missing a payment due to oversight, and seeing the psychological benefit of seeing successive cards show up with ZERO balances.

If you sit down and do the calculations on how much supposed interest is saved over a year with the various approaches (and I have) then it is well worth followng the snowball approach. Gain mastery over your debt by gaining the psychological edge to stay the course and see each paid off account as a well won victory over credit card debt. 

I can't undertsand how people who have themselves struggled to get from under the slave master that is credit card enslavement can't understand this. It is a basic need of human nature and psychology. 

[steel_string]

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@Anonymous wrote:

I can't undertsand how people who have themselves struggled to get from under the slave master that is credit card enslavement can't understand this. It is a basic need of human nature and psychology. 

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Not everyone thinks the same way. Some people are more rational than that.

[niko79]

Just wanted to update everyone on my progress. So I dropped another few thousands on the credit card debt and got my scores up a little bit. SoFi gave me a personal loan that would cover the remaining CC debt at 7.25% for 36 months without origination fees or prepayment penalty for one low monthly payment!

I just paid off the smaller cards first and paying slowly on the higher balances so they do not cut my limits by paying it off without first smaller cards reporting to the Credit Bureaus and getting my FICOs up to prove I am doing something right.

I think based on what some of you said here this I believed was the best strategy for me. This loan lowered my monthly credit obligations by almost $500 which will let me save that money for an emergency fund or pay off that loan (debt) faster.

Just wanted to update you guys here.

Any comments or suggestions?

[icyhot]

That's great! How many balances do you have on your CCs (if any) how much was the loan for and what are your payments on it?

[niko79]

The balances at the end were a little over 20k. The loan was 20k even at 7.625% or something like it and the payment a little over $623, I think, over 36 months.

There was some small loans with $150/month payments and small balances which I paid off now so the monthly savings are out of whack but you get the point.

My wife and I were ecstatic when I got it funded, as it seemed before I was paying all interest, not principal, and we were not moving in the good direction financially. I am still waiting for 10k back from my family to be paid back to me and will pay towards that loan once I get it back.

[niko79]

I just had this added to my SoFi account:

Rate: 7.63% FIXED

[Anonymous]

Keep doing what you're doing. Update at the end of October with updated scores. Stay the course and keep on budget now that you have been given a lifeline for a second start.