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New Member
Posts: 4
Registered: ‎03-15-2013
0

Knocking out debt

[ Edited ]

I started a new job not too long ago with significantly better pay and am looking to clean up the mess I made for myself. Here's my current financial situation.

 

CC Debt:

Discover: $330. Mostly day-to-day budgeted expenses. Pay it off every month. 14.99% APR

Cap1 Visa: $700. I've just been nursing this. 24.90% APR

Chase Visa: $3k. Laziness, lack of planning and some bad decisions got me here. Again, have been nursing this. 22.99% APR

 

Utilization: ~90%

 

LOC:

$2100; isn't reported; have been nursing. 25.99% APR

 

Loans:
$14000, 48mo auto loan. 7.24% APR

$2000. No future interest.

 

Inquiries:

12 in the last 12 months, but 6 are from auto loan shopping. 3 are from the cable company, though I don't know if that matters much.

 

Baddies:

None.

 

FICO Score:

603

 

Monthly Disposable Income:

Usually around $1000, though it looks to be slightly less with summer electricity bills.

 

Man, that looks a lot worse when I write it out. :smileysad:

 

Anyway, I'm wondering how I should best move forward. My thought was that I should pay off the Cap1 Visa first, because it's a simple goal I can accomplish very quickly. But I'm not sure what I should do after that. Tackling the Chase debt would help my credit score, but I pay a lot more interest on my LOC. I want to see improvement in my credit score as soon as possible, but that might not be the best thing for me financially. I'm guessing balance transfer apps are pretty much out of the question given my scores.

 

Suggestions?

Established Contributor
Posts: 852
Registered: ‎09-18-2007
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Re: Knocking out debt

I would go with the reportable stuff (except the low interest ones), then pay off the line of credit...get rid of the high interest stuff.  Don't make any apps, wait a year to apply for anything else, my guess you would probably go up once you get rid of the 12 inquires.


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Current Score: EQ 680, TU 672
Goal Score: EQ 720, TU 720


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New Member
Posts: 3
Registered: ‎08-21-2009
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Re: Knocking out debt

My husband and I have started listening to the Dave Ramsey pod cast and it has really motivated us to get out of debt.  Dave Ramsey is the Debt is Dumb Cash is King guy.  lol  He teaches a method to be debt free.  It is very motivating listening to all of the different people that have gotten completely out of debt using his methods.  He gives tons of advice.  I think he will even answer calls and emails if you have questions on what you should do in your situation.  Some of the things he talks about is doing a monthly budget (which we never had before) accounting for every dollar and not going over budget.  Step 1 is save up a $1000 emergency fund. (my husband and I could not save if our lives depended on it until now) Then you start knocking out your debt.  He says to start with the smaller balances first because as you pay those off quickly you will be motivated to pay off the next card etc.  What ever you were putting towards the debt you pay off, you start putting that money towards the next debt plus what ever you were already paying.    If we stay on track with his method we will pay off $81,500 in 3 years and 10 months. (that includes both of our cars and we still have 4 years on one car left and 6 on the other)  I know it sounds like a long time, but there are ways to pay it off quicker.  We cut off cable (saves 100 a month and has made us more active) and we don't go out to eat anymore (saves 200+)   That money get chunked towards a credit card each month.  We are determined to do whatever it takes and make sacrifices to get out of debt.  We are on our way.      

 

Good luck with knocking out your debt!   :smileyhappy:

 

Life after BK
TR - 652
EQ - 660
EX - 665
Goal - to be 720+ and debt free
Epic Contributor
Posts: 22,406
Registered: ‎01-17-2008
0

Re: Knocking out debt


Voluntary wrote:

I started a new job not too long ago with significantly better pay and am looking to clean up the mess I made for myself. Here's my current financial situation.

 

CC Debt:

Discover: $330. Mostly day-to-day budgeted expenses. Pay it off every month. 14.99% APR

Cap1 Visa: $700. I've just been nursing this. 24.90% APR

Chase Visa: $3k. Laziness, lack of planning and some bad decisions got me here. Again, have been nursing this. 22.99% APR

 

Utilization: ~90%

 

LOC:

$2100; isn't reported; have been nursing. 25.99% APR

 

Loans:
$14000, 48mo auto loan. 7.24% APR

$2000. No future interest.

 

Inquiries:

12 in the last 12 months, but 6 are from auto loan shopping. 3 are from the cable company, though I don't know if that matters much.

 

Baddies:

None.

 

FICO Score:

603

 

Monthly Disposable Income:

Usually around $1000, though it looks to be slightly less with summer electricity bills.

 

Man, that looks a lot worse when I write it out. :smileysad:

 

Anyway, I'm wondering how I should best move forward. My thought was that I should pay off the Cap1 Visa first, because it's a simple goal I can accomplish very quickly. But I'm not sure what I should do after that. Tackling the Chase debt would help my credit score, but I pay a lot more interest on my LOC. I want to see improvement in my credit score as soon as possible, but that might not be the best thing for me financially. I'm guessing balance transfer apps are pretty much out of the question given my scores.

 

Suggestions?


You didn't mention your balances along with your CL.  If your CC is maxed out that is another ding to your score along with high utilization.  I would get the ones maxed out or near maxed out paid down to below half before I started paying them way down. 

Senior Contributor
Posts: 3,930
Registered: ‎10-26-2012
0

Re: Knocking out debt

New Member
Posts: 4
Registered: ‎03-15-2013
0

Re: Knocking out debt

Thanks for the advice thus far, everyone.

 

The Chase and CapOne are both almost maxed out. Just so I understand: I should cut down utilization on the high-balance cards before focusing on individual accounts. That will help to reduce multiple negative factors in my FICO score, as opposed to focusing on an individual account's balance. Is that correct?

Epic Contributor
Posts: 22,406
Registered: ‎01-17-2008
0

Re: Knocking out debt

Knock down the utilization on the ones maxed out first, no matter what the interest is.  This will reduce the multiple negatives.  Then work on them individually.

Valued Member
Posts: 114
Registered: ‎04-22-2013
0

Re: Knocking out debt

[ Edited ]

Yes, try to knock out the high balance cards first... After that I'd go by APR... You are getting killed with interest! 

 

If it were me I would do:

1. CapitalOne

2. Chase

3. Discover

4. LOC

 

If you are focused more on personal fiances vs. credit score, I'd swap LOC and Discover

 

High utilization and lots of inquiries are likely holding your score back

New Member
Posts: 4
Registered: ‎03-15-2013
0

Re: Knocking out debt

Yeah, I've known the interest is killing me, but, unfortunately, I hadn't been able to do anything about my balances until this new job.

 

I shall use your advice. Thank you for the help.

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