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New Contributor
baileyboy
Posts: 76
Registered: ‎04-17-2007
0

Strategy for paying off cards

Sorry in advance for the length of this... And I hope I posted this in the right place.
 
I have too many cards. With low limits and too high util, more than half are over 85% util, and overall is at 68%. I thought I could PIF in two years, but am starting to wonder if I'm kidding myself. I'm hoping someone will help with a strategy... let me know if my plan is totally off base... or just lend some support...
 
Please know that I am sufficiently annoyed with myself about this, and have resolved to never do it again. No chiding needed - I do a pretty good job of that myself. :smileywink:
 
If it weren't for interest, this would actually be very manageable as I currently pay $1000-$1100 each month to this debt. It's about 40% of my take home and doesn't allow for much entertainment, but I will do what I have to. I already cut up several (felt great), so at least psychologically, I've made headway. 
 
So... very humbly, I offer the following: Interest goes from very low to 28%.
Here's my 9 card summary:
2 with about 4700 balance - one at 8.9%, the other at about 20% (no brainer #1)
2 with about 2K balance - 3.9% for about a year, and 28% (no-brainer #2...)
3 with 1500-1700 balance - 8.9%, 15%, 19%
2 with 1000 balance - 13.9%, 15.5%
Total about $21K
 
I have never been late or over limit on any. I've been paying at least the minimum + interest rounded up to the next "nice" round number - but always $100+ per card. I hate paying interest on interest, if you know what I mean, hence my min + int approach. I now realize I may not be able to do that and get this paid in two years.
 
My inclination is to snowball smallest to largest, just to make some headway, since all but two are $2K or less. Does that make sense? Should I knock out the two at 1K then tackle the one 2K at 28%? I'm just having trouble prioritizing it, and still hoping to find a way to pay min + int at least (knowing I may not be able to), yet still be able to make a real dent ($300?) in at least one each month.
 
Any help is most appreciated. Thanks for any guidance, and for your patience in reading this.
 
Established Contributor
FICO_Focused
Posts: 905
Registered: ‎05-09-2007
0

Re: Strategy for paying off cards

Sowball is the BEST possible way to pay your debts down FAST... Great way to play the game.

Rob
New Contributor
baileyboy
Posts: 76
Registered: ‎04-17-2007
0

Re: Strategy for paying off cards

Yes, but am I stuck paying interest on interest? Given the monthly $1000+, any ideas on splitting payments, or do I just bite the bullet and pay min (no interest) on all but the one at the top of the snowbank (as it were) - traditional snowball method? Wouldn't I actually end up paying more interest doing that?
 
Regular Contributor
illcrew3
Posts: 204
Registered: ‎08-08-2007
0

Re: Strategy for paying off cards

I pay 100 a month on all my cards and when the lowest is paid off I split the 100 i would have spent it to the rest of my cards an so forth. Eventually you can be making  2 3 4 or even 500 dollar payments on 1 card.
Moderator Emeritus
HappyDays
Posts: 7,326
Registered: ‎06-18-2007
0

Re: Strategy for paying off cards



illcrew3 wrote:
I pay 100 a month on all my cards and when the lowest is paid off I split the 100 i would have spent it to the rest of my cards an so forth. Eventually you can be making  2 3 4 or even 500 dollar payments on 1 card.



I do the same. I pay way before the due date also...this cuts the int. I always pay down the hightest int. first.  When you pay when it first appears on your bill   you will see your payments go futher.
 
Between DH and myself we have 15 CC....7 are new so we have to use them in order to get the credit to report. then they will be in sock drawer.
 
I can not pay all at one time, so ..I pay part pmts every week on all cards BUT I am always paid in full before due date...I also pay as much as I can on the highest int. first.
New Visitor
kommandant
Posts: 3
Registered: ‎08-28-2007
0

Re: Strategy for paying off cards

I'm kind of embarassed to say this, but I bought one of those John Commuta "paying off your debts strategies" DVDs and while it was worthless, it did offer a strategy that worked for me:smileymad: (This was the only worthwhile thing so save your money and don't buy good old John's DVDs. I will sell you mine if you still can't resist:-).It said that the best way was to focus on one credit card (pay the most you can on the one that can be paid off first) and pay minimum payments on all the others. This strategy works and I am now debt free. No credit card debt, cars are paid for and nothing else. All I have is a house payment, cable, internet and utilities. It makes a GIANT difference in the way one sleeps.
 
Another thing that works and I realize that it sounds silly. Take all of your credit cards out of your wallet. Grab them from your wife too. Get two sandwich bags. Put ALL of the cards in bag one and seal it. In bag 2, fill it with water. Put bag 1 into bag 2. Stick both bags in your freezer and leave them there. It is amazing how your attitude at buying something changes in the two or three hours it takes to thaw out the sandwich bags. If you microwave the bags to speed it up, the credit cards will turn to mush. You still have the credit for emergencies, but you aren't using it. I only carry a debit card and it forces me to ask myself this question. How much do I really want to buy this thing-a-ma-jig? Usually in two hours I have at least ten reasons to postpone the purchase.
 
This is a great habit former and it works:smileysurprised:
New Contributor
baileyboy
Posts: 76
Registered: ‎04-17-2007
0

Re: Strategy for paying off cards



kommandant wrote:
I'm kind of embarassed to say this, but I bought one of those John Commuta "paying off your debts strategies" DVDs and while it was worthless, it did offer a strategy that worked for me:smileymad: (This was the only worthwhile thing so save your money and don't buy good old John's DVDs. I will sell you mine if you still can't resist:-).It said that the best way was to focus on one credit card (pay the most you can on the one that can be paid off first) and pay minimum payments on all the others. This strategy works and I am now debt free. No credit card debt, cars are paid for and nothing else. All I have is a house payment, cable, internet and utilities. It makes a GIANT difference in the way one sleeps.
 
Another thing that works and I realize that it sounds silly. Take all of your credit cards out of your wallet. Grab them from your wife too. Get two sandwich bags. Put ALL of the cards in bag one and seal it. In bag 2, fill it with water. Put bag 1 into bag 2. Stick both bags in your freezer and leave them there. It is amazing how your attitude at buying something changes in the two or three hours it takes to thaw out the sandwich bags. If you microwave the bags to speed it up, the credit cards will turn to mush. You still have the credit for emergencies, but you aren't using it. I only carry a debit card and it forces me to ask myself this question. How much do I really want to buy this thing-a-ma-jig? Usually in two hours I have at least ten reasons to postpone the purchase.
 
This is a great habit former and it works:smileysurprised:


Kammandant - Well, you got one useful strategy from it, so it was worth it on some level. :smileytongue:
 
Did you - and the others who have posted here - pay only the actual minimum they required, or minimum + interest? This is where I'm really struggling. As I said, I hate paying interest on interest - it's bad enough as it is. Seems I can't have it both ways. I'm just going to have to chip away at it.
 
Great ideas about freezing... and I'm amused imagining your microwaving them only to find out that turns them to mush... But my problem has never been using the cards for "stuff". In the past, I had a  gambling problem that is now being dealt with (severely), so most of my debt is from cash advances (yes, I know, bad girl). I've cut up the five that I used for cash, and all others stay in the sock drawer except for one low int rate card and my debit card which I carry with me. I always try to use debit/cash for day to day things.
 

 
Moderator Emeritus
HappyDays
Posts: 7,326
Registered: ‎06-18-2007
0

Re: Strategy for paying off cards

[ Edited ]
I can not always pay more then the min due....BUT I pay when new bill is posted...this saves on new int.
I do not freeze my CC   I put them in a socdrawer & bring them out once or twice a year to keep them active.


Message Edited by HappyDays on 08-28-2007 10:43 AM
Established Contributor
bamf70
Posts: 677
Registered: ‎05-31-2007
0

Re: Strategy for paying off cards

What are your scores? If you can pay down your debt to about 50% util or less, why not apply for a couple new cards that offer either very low or 0% BT? Then just transfer all your higher APR cards to the new ones. Then when you make a payment 100% of your money is going to principal. I know there are quite a few cards out there that offer 0% or 3.9 - 5.9 APR for BT.....Just a thought.
New Contributor
scorepower
Posts: 72
Registered: ‎08-17-2007
0

Re: Strategy for paying off cards

Hi,
 
I would call the high interest rate cards first and request they reduce the APR.  I did this on all my cards and they reduced.  This saved me a bunch in interest.  

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