Anybody want to get debt free????

[MidnightVoice]

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PeggyFair wrote:

So how much of a ding will your score take if you pif every month and carry $0 balance? I'm not trying to get a very high score, my goal was just 750-770. Will this be attainable if I decide to disregard the "1-9%" utilization?

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Also, PIF does not always give you a 0% util.  many CCCs report the balance to the CRAs, so that will be your util, even if you PIF after the statement date

[Anonymous]

<<Also, PIF does not always give you a 0% util.  many CCCs report the balance to the CRAs, so that will be your util, even if you PIF after the statement date>>

Yes, this is what I was thinking. My reports will more than likely show a low util since my CCs report before my due date.

[Anonymous]

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Boswd wrote:

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fraz wrote:

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Noah_Bodie wrote:

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Boswd wrote:

The snowball effect is the most effective way to pay down debt, but whatever works for you, if you choose the APR way than if that works for you that's cool too.     I feel the snowball is better because by the time you get to your higer balances your snowball will be at such an amount that it will actually make a dent into it and you'll will be able to pay down more debt by paying off smaller ones first instead of waiting an insane amount of time waiting to pay off your larger debt.

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Boswd, I admit I ain't the brightest bulb. I graduated high school in the third of my class that made the top two/thirds possible.

Just not seeing how letting high APR debt ride while paying down lower APR debt jes cuz it's bigger, or smaller, or prettier, is going to pay off debt sooner.

I'm curious to hear the theory behind this.

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I think it's the same way that the BoA .2% "change" savings helps you make a fortune.

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You are a piece of work I'll tell you that.   Go back and look at that thread again and show me where I said this was the best savings option out there.    I clearly stated that I have my ING I use as my primary savings and just take advantage of the BofA keep the change because it is an innovative way of creating some extra cash.   

Ok  I live in the NorthEast and right now it is cloudy and rainy.  Would you like to rebute that fact just to agrue with it?   Just wondering chief.

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I just advocate a little self control is all.  I don't need someone to hold my hand to use my "change" and apply it to savings.

[Anonymous]

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Boswd wrote:

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fraz wrote:

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Boswd wrote:

yeah I guess the OP is a Dave Ramsey fan.   I too am one as well.   The snowball effect is the most effective way to pay down debt, but whatever works for you, if you choose the APR way than if that works for you that's cool too.     I feel the snowball is better because by the time you get to your higer balances your snowball will be at such an amount that it will actually make a dent into it and you'll will be able to pay down more debt by paying off smaller ones first instead of waiting an insane amount of time waiting to pay off your larger debt.

But having said that that is no reason to come on here and just start blasting people.    I think you'll find that most advice on this board is excellent especially trying to acheive a good score.  

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Boswd,

So, what is the deal?  You state that "the snowball effect is the most effective way to pay down debt."  And, so no one misunderstands, you are referring to an earlier reply where "snowball" means paying off the lowest debt first, then working your way to the highest debt.

I can play with a spreadsheet until I'm blue in the face and the only time that works is if, in fact, the APR's are lower on your higher balances.  Otherwise, you are throwing away money in interest every single time.  Go ahead, give me any numbers you want, and I can tell you how much money you are wasting.

However, you then say, "I feel the snowball is better......"

I'm just confused.  In one sentence you are making a statement as if it's a fact (which I can't figure out how), then in the other, you state your opinion.

I've only heard of this Ramsey character on a few forums, but if this is the kind of "logic" he explains to people, then ouch.

I guess "a penny saved" isn't a penny earned, if you have to wait "an insane" amount of time.  Sure, you'll carry debt on more cards for a longer period of time, but you'll pay off the debt faster and save more money by paying the higher APR's before the lower one's.

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The snowball effect works in essance like this.  Trust me I understand the APR thing but not all of your higher debts are always going to be the APR, that's your assumption not mine.  But any way, it used to where you change your spending habits and your budget in order to find some extra income and apply that extra income towards paying down your debt

So lets say you found a way to come up with an extra $200 and now you are looking to apply that your current debt.   And lets say you have 3 credit cards

CC 1  balance   $10,000  min pay.  $200

CC 2  balance    $6,000 min pay     $150

CC 3  balance    $4,000  min pay    $100        

So now with the extra $200 you have been able to come up you add that on to the $100 you've been paying on your min for your lowest bill.     So now you are paying $300 until that is paid off.  Once it's paid off,  all the while you are still paying the min on each credit card.   Now you take the $300 you've paid on your the card you just paid off and add it to the min payment of your next one that is $150.   Now you are paying  $450 per month until paid off.    Then add it to your last one which is has the min payment of $300 and you are now paying $650 per month.

The reason why I like it best and I think it works better is because   1.  yes the phscological factor that keeps you motivated  and  2.   By the time you get to your highest balance your snowball has a signigant size and will make a much bigger dent into the highest balance now paying $650 per month.

You also have to remember that is geared towards people who are in deep debt not just someone who has money and just looking to pay down a few card, but with people with real problems  

So if you like the APR way no matter which of the debt has the larger balance, than hey go have a ball, get some party hats and go crazy,     I like and do feel the snowball effect it the most effecient way to get down the debt quicker.

OK   now I drive a Hoday Civic  Fraz,  do you want to list your reasons why this is not a good option too?    

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I'm going to try to play nice here.

You state: "Trust me I understand the APR thing but not all of your higher debts are always going to be the APR, that's your assumption not mine."

First, I didn't make that assumption.

Second, can you atleast agree that despite the psychological benefit of paying off a debt, if it has less money going towards interest (ie, lower APR) then another debt, that you are throwing away money?

This is the simplest way I can think of explaining it.

Lets assume two debts on credit cards.

CC1 - $5000 - 0% interest - minimum monthly payment $100

CC2 - $10000 - 20% interest - minimum monthly payment $200

Again, lets assume you have $200 extra a month to apply towards your debts.

You wouldn't honestly pay $300 a month to CC1 until its paid off, then start paying 500 to CC2 after CC1 is paid off, would you?

For what it's worth, I live in Colorado, its nice and sunny, and I too drive a Honda and have an ING savings (& checking account, along with a few other savings accounts).

And, for the OP, since I don't think I ever answered his question, of course I'd like to be debt free.  And, when that happens, I'm really not going to care about my APR's at all.  PIF is obviously the best way to go, and if "life didn't happen," that's how I'd be doing it.  As it is, I'm paying off my debt (higher interest to lower with my extra monthly money going to the higher interest) in the most cost saving manor, not the manor that gives me a "psycological boost" because I have one less card to pay off.  I'm sorry, I have self control.

Did I mention that it too me 9 months to lose 90 pounds?  2 to 2.5 pounds a week.  Really wasn't hard to do, and have been able to keep it off for....I guess 4 years now.  Again, self control.

[Boswd]

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fraz wrote:

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Boswd wrote:

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fraz wrote:

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Noah_Bodie wrote:

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Boswd wrote:

The snowball effect is the most effective way to pay down debt, but whatever works for you, if you choose the APR way than if that works for you that's cool too.     I feel the snowball is better because by the time you get to your higer balances your snowball will be at such an amount that it will actually make a dent into it and you'll will be able to pay down more debt by paying off smaller ones first instead of waiting an insane amount of time waiting to pay off your larger debt.

---

Boswd, I admit I ain't the brightest bulb. I graduated high school in the third of my class that made the top two/thirds possible.

Just not seeing how letting high APR debt ride while paying down lower APR debt jes cuz it's bigger, or smaller, or prettier, is going to pay off debt sooner.

I'm curious to hear the theory behind this.

---

I think it's the same way that the BoA .2% "change" savings helps you make a fortune.

---

You are a piece of work I'll tell you that.   Go back and look at that thread again and show me where I said this was the best savings option out there.    I clearly stated that I have my ING I use as my primary savings and just take advantage of the BofA keep the change because it is an innovative way of creating some extra cash.   

Ok  I live in the NorthEast and right now it is cloudy and rainy.  Would you like to rebute that fact just to agrue with it?   Just wondering chief.

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I just advocate a little self control is all.  I don't need someone to hold my hand to use my "change" and apply it to savings.

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Ohh brother, you know what?   who cares,  you don't like the idea and I, for one who using his debit alot,  like it.   So what!!!   Time to move on. 

[Boswd]

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fraz wrote:

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Boswd wrote:

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fraz wrote:

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Boswd wrote:

yeah I guess the OP is a Dave Ramsey fan.   I too am one as well.   The snowball effect is the most effective way to pay down debt, but whatever works for you, if you choose the APR way than if that works for you that's cool too.     I feel the snowball is better because by the time you get to your higer balances your snowball will be at such an amount that it will actually make a dent into it and you'll will be able to pay down more debt by paying off smaller ones first instead of waiting an insane amount of time waiting to pay off your larger debt.

But having said that that is no reason to come on here and just start blasting people.    I think you'll find that most advice on this board is excellent especially trying to acheive a good score.  

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Boswd,

So, what is the deal?  You state that "the snowball effect is the most effective way to pay down debt."  And, so no one misunderstands, you are referring to an earlier reply where "snowball" means paying off the lowest debt first, then working your way to the highest debt.

I can play with a spreadsheet until I'm blue in the face and the only time that works is if, in fact, the APR's are lower on your higher balances.  Otherwise, you are throwing away money in interest every single time.  Go ahead, give me any numbers you want, and I can tell you how much money you are wasting.

However, you then say, "I feel the snowball is better......"

I'm just confused.  In one sentence you are making a statement as if it's a fact (which I can't figure out how), then in the other, you state your opinion.

I've only heard of this Ramsey character on a few forums, but if this is the kind of "logic" he explains to people, then ouch.

I guess "a penny saved" isn't a penny earned, if you have to wait "an insane" amount of time.  Sure, you'll carry debt on more cards for a longer period of time, but you'll pay off the debt faster and save more money by paying the higher APR's before the lower one's.

---

The snowball effect works in essance like this.  Trust me I understand the APR thing but not all of your higher debts are always going to be the APR, that's your assumption not mine.  But any way, it used to where you change your spending habits and your budget in order to find some extra income and apply that extra income towards paying down your debt

So lets say you found a way to come up with an extra $200 and now you are looking to apply that your current debt.   And lets say you have 3 credit cards

CC 1  balance   $10,000  min pay.  $200

CC 2  balance    $6,000 min pay     $150

CC 3  balance    $4,000  min pay    $100        

So now with the extra $200 you have been able to come up you add that on to the $100 you've been paying on your min for your lowest bill.     So now you are paying $300 until that is paid off.  Once it's paid off,  all the while you are still paying the min on each credit card.   Now you take the $300 you've paid on your the card you just paid off and add it to the min payment of your next one that is $150.   Now you are paying  $450 per month until paid off.    Then add it to your last one which is has the min payment of $300 and you are now paying $650 per month.

The reason why I like it best and I think it works better is because   1.  yes the phscological factor that keeps you motivated  and  2.   By the time you get to your highest balance your snowball has a signigant size and will make a much bigger dent into the highest balance now paying $650 per month.

You also have to remember that is geared towards people who are in deep debt not just someone who has money and just looking to pay down a few card, but with people with real problems  

So if you like the APR way no matter which of the debt has the larger balance, than hey go have a ball, get some party hats and go crazy,     I like and do feel the snowball effect it the most effecient way to get down the debt quicker.

OK   now I drive a Hoday Civic  Fraz,  do you want to list your reasons why this is not a good option too?    

---

I'm going to try to play nice here.

You state: "Trust me I understand the APR thing but not all of your higher debts are always going to be the APR, that's your assumption not mine."

First, I didn't make that assumption.

Second, can you atleast agree that despite the psychological benefit of paying off a debt, if it has less money going towards interest (ie, lower APR) then another debt, that you are throwing away money?

This is the simplest way I can think of explaining it.

Lets assume two debts on credit cards.

CC1 - $5000 - 0% interest - minimum monthly payment $100

CC2 - $10000 - 20% interest - minimum monthly payment $200

Again, lets assume you have $200 extra a month to apply towards your debts.

You wouldn't honestly pay $300 a month to CC1 until its paid off, then start paying 500 to CC2 after CC1 is paid off, would you?

For what it's worth, I live in Colorado, its nice and sunny, and I too drive a Honda and have an ING savings (& checking account, along with a few other savings accounts).

And, for the OP, since I don't think I ever answered his question, of course I'd like to be debt free.  And, when that happens, I'm really not going to care about my APR's at all.  PIF is obviously the best way to go, and if "life didn't happen," that's how I'd be doing it.  As it is, I'm paying off my debt (higher interest to lower with my extra monthly money going to the higher interest) in the most cost saving manor, not the manor that gives me a "psycological boost" because I have one less card to pay off.  I'm sorry, I have self control.

Did I mention that it too me 9 months to lose 90 pounds?  2 to 2.5 pounds a week.  Really wasn't hard to do, and have been able to keep it off for....I guess 4 years now.  Again, self control.

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Well using a 0 percent example is a little different if the  min payment goes directly onto the principle and you have a 0% for the life of the card.   Which in most cases   that just isn't reality .

So in the cases of cards that do have interests rates then   again I would still  pay off the lowest amount first because that extra $200 will go much further adding it on to you min payment of $100 making it $300 and when paid off the $500 you would now be paying on the next card would do more damage to the balance than the $400.

Also if you pay off your highest APR first and let's say it is your highest balances it will take a lot longer until you are able to pay off your other balances all the while your balances on your other cards are still getting hit with interest fees albeit smaller ones but they all add up through the course of time.    I feel the snowball effect is a more time effecient and in the end saves you money on interest and at the same time elimanates each debt one by one alot quicker.

But who know's where someone's APR balances falls into, it could be your lowest balance it could be your middle or your highest.    I would just start with the lowest and work up. 

[Anonymous]

Boswd,

I agree we should move on, but you are not paying off your debts any sooner by using your method, and you are throwing away money towards interest.  It's really not complicated math, but I obviously am unable to show you this, which just means I'm not a good teacher.

Weird, though, that every calculator I can find on the "internets" does it by APR, here are 2:

http://www.bankrate.com/brm/calsystem2/calculators/debtpaydown/default.aspx

http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp

Please, find me one that doesn't recommend taking the APR as a factor.

[MidnightVoice]

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fraz wrote:

Boswd,

I agree we should move on, but you are not paying off your debts any sooner by using your method, and you are throwing away money towards interest. 

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I think we are comparing cold hard figures, used by cold hard illegitimate children, with warm and fuzzy feelings generated in people who are not cold hard illegitimate children, when they pay off via a different route  

And although I am in the cold hard section of the audience, I can understand the warm and fuzzies as well. 

Message Edited by MidnightVoice on 07-05-2007 01:08 PM

[Anonymous]

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MidnightVoice wrote:

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fraz wrote:

Boswd,

I agree we should move on, but you are not paying off your debts any sooner by using your method, and you are throwing away money towards interest. 

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I think we are comparing cold hard figures, used by cold hard illegitimate children, with warm and fuzzy feelings generated in people who are not cold hard illegitimate children, when they pay off via a different route  

And although I am in the cold hard section of the audience, I can understand the warm and fuzzies as well. 

Message Edited by MidnightVoice on 07-05-2007 01:08 PM

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Can't we all sing Kum Ba Ya and move on?

[MidnightVoice]

Time for a Group Hug?