$32K in debt between two people. $2600 in payments every month. best plan of action?

[SpiceIslander]

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@trumpet-205 wrote:

I disagree with paying down 29% at first, people seems to forgot we have things called minimum interest charge and minimum payment.

My suggestion is snow ball method. You pay down the card with the least amount of balance first, then the next smallest, etc. This method allows you to free up more minimum payments as you pay down your debt, and you do not have to overpay your interest from minimum interest charge. Hence the word snowball, as later on your payment grows.

Another method would be to open up a personal loan and consolidate all your CC debts.

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There are many variations on the snowball method. I tend to think in terms of saving interest over other considerations. (Off the top of my head) That 29% interest must be costing close to 300.00 per month! I would pay the minimum on everything that's at 0% except for the smallest amount owed. Double that payment and put the rest on the 29% biggie. When the smallest balance is paid off, you can use the snowball method, applying the payment to the next lowest balance. That way, you get the the gratification from the snowballing and still keep the monster at bay. Also, you may be able to get an APR reduction if you ask. No guarantee but won't hurt to ask. OP, I know you're thinking about your scores but that damage has already been done. It might be wiser to do what will save you money in the long run. As your balances decrease, your scores will bounce back.

[jamie123]

You need to get rid of the 29% interest card FIRST!

You are paying almost $5000 interest a year or $100 every WEEK in INTEREST on that card and that's before you touch the principal!

For every $100 you can BT to one of your 0% cards you will save 26% interest. (29% minus 3% transfer fee) THAT IS NOT A BAD DEAL!

That card has loan shark type interest. You really do need to sock drawer that card.

Go down the line, pay minimums on all cards and the rest of the $2600 on the highest interest card that remains.

Sock drawer that 29% card NOW!

[jamie123]

Additional thoughts...

I've re-read and studied your initial post.

From what I can tell you and your husband have been living above your means. You have not been totally honest with us about your past credit history. I see you mentioning all your new cards that have 0% offers. You need to STOP carrying balances on your cards!

Have you been living your lifestyle as to how much credit lenders will grant you?

You really need to put ALL the cards away for a year and pay-off your current debt. It won't be easy by no means, but you really need to do it now BEFORE you get in trouble.

If you don't change your behavior now we might be seeing you in the CREDIT REBUILDING FORUM in about 2 years, after you file BK.

Just some advice...I didn't mean to be harsh but you really do need to get out of CC debt now.

[Anonymous]

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@Quips wrote:

Put improving the FICO score aside ...

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+1. My question is why the FICO score is important right now, and I suspect it's because you're planning on applying for something... But when considering you have over $50,000 in available credit, many of us are proposing you step back a second, at least until you get things back under control. Just $0.02, not meant to be offensive or anything

As for your question on the balance transfers, that could be a great idea to offload some of the 29% debt into a short-term 0% holding cell. I'm a spreadsheet guy, so fire up Excel and crunch _all_ the numbers to see which snowball/payment method saves you the most money and/or pays off your balances more quickly.

And then, still, you'll have $50,000 in available credit.

[Quips]

I am also a spreadsheet guy and here is what I came up with:

First - pay the first $2,600 (less any minimums due on the other cards) on First financial (leaves a balance of $12,200)

Then BT the 12,200 to the Citi and 2 chase cards - that will get the First Financial to 0% and save you 29% interest immediately

Then - pay the minimum on all the other cards except the USC until that is paid off - should take 3-4 months

Then pay the BoA and Best Buy off - should happen in Jan 2103

In Feb 2013 - Start paying off the $3,500 balance on Chase 2 that is at 10%

When that $3,500 is paid off - start working on the Discover - you should be able take care of that in 2 months - now it is April 2013

Finish paying off the Chase 2 - done in May 2013

Then pay off the Chase 1 - Done by July 2013

Citi next - paid off by Aug 2013. 

If you do it this way you will be out of debt by Aug 2013 - assuming you don't take on any other debt in the interim

By March of 2013 - the only balances you should have remaining will be at 0% - Discover, Chase 1 & 2 and Citi

Good luck

[lithium78]

My BoA is currently offering a 12 month 0% BT on my account.  Have your husband check if his BoA account is offering the same and you could transfer at least some of the First Financial balance over to it and save yourself some of the interest.