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GNEXUS7
Posts: 3
Registered: ‎06-30-2012
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Would Appreciate Help/Advice paying down debt

Hello Follow Members'

How's everyone,I'm new here let me introduce myself and my situation.
I have 6 CC'S,I have listed these cards with Balances/Available Credit and with there interest rate's. Have not seen any apr charges to my statement's, where i will than asked for it to be waived.

1Fbusa - 4,558/7,400 i@ 22%
Wells - 1,1716/2,000 i@ 19%
Cap one - 1,566 /1,750 i@ 22%
Amex - 1,208/1300 i@ 19% on cash advances($650, 8% on purchases
$558)
Citi- 569/780 i@ 17%
Chase - 223.58/2500 i@ 21%

^since these are quick estimates, my credit usage is 75%
I've tried a debt loan from my bank, and was not approved, I than did a Credit Report
through my bank(W.F) where i then received the reason that i was not approved and
said this:
[*LIST]
[*] Proportion of balances to credit limits on revolving too high
[*]Length of revolving credit history too short
[*]Amount owed on accounts too high
[*]Length of credit history too short
[/LIST]

My credit scores: Experian = 711, Trans Union=687, Equifax=685

I have had credit no more then 5 years.
(I now to check my statements regularly and log down everything, I'm disappointed
that i let it reach this far, As I let priorities and school get the way.(when this was a priority in itself), Older sibling's and parents do not have the greatest of credit, where I seen bankruptcies and other various bad credit habits will not going down that path, And looking to make the right moves. I'll be on the forum more often now, as I look for help from you guy's.

(note. I have had no purchases or advances within the last 18 months)

I have no reason or intend to have in big purchases or charges.

Key points:
-I work full time, 1400 a month(been working fulltime last 4 years)
-5k in checking
-My debt to income ratio as of right are is just my living necessities(groceries,household amenities) and gas, car is payed off
-Do live with relatives( rent is not a major issue)

What plans do you advice?,Start paying the most I possibly could? What should i Eliminate First? Am I looking at a Debt Loan from outside the bank? Or should pay off as much as i can to reach a high C.C score and apply for a new card(s) that offer a Balance Transfer Or apply for a Loan/Personal line of credit from the Bank.

It would be a great deal of help and mean a lot if you can guide me on way of lowering and paying my debt.

 

(Look forward to the responses)
Thank You,

Moderator
Revelate
Posts: 8,938
Registered: ‎12-30-2011
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Re: Would Appreciate Help/Advice paying down debt

I'm a little confused :smileywink:.  You have 5K in your checking account earning way less than the interest on any of your cards, why are you hanging onto that rather than airstriking your balances?  You only have ~9K in outstanding debt, that'd slash your utilization in half and probably take care of 2 of the 4 reasons you were denied right there.  Also the bank would've known you had 5K, so while it wasn't stated, they're going to be wondering why you're borrowing money from them and you have that cash sitting there.

 

What I'd do, kick 1K at Wells / C1 / Amex, and nuke the Citi balance.  That still leaves you with some cash reserve, probably bumps your FICO up decently, and really only leaves you with the 1FBUSA balance to take care of.  Alternatively you could stuff that cash in a CD, and take out a 100% LTV installment loan against it and pickup an installment tradeline as well, but that's more sophisticated FICO tweaking and it would depend on what else is on your report like auto loans and the like.

 

Anyway, at that point I'd re-evaluate where I stood, and either the debt consolidation loan from someone, or a BT transfer card might be within reach.

 

Further information is probably needed for more sophisticated analysis, namely when you opened each one of the cards and people may be able to give additional options as to what you can do... but I would absolutely be paying as much as I could on the balances in the meantime.  

 

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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LIGHTNIN
Posts: 4,063
Registered: ‎03-24-2008
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Re: Would Appreciate Help/Advice paying down debt

Hi and Welcome to the forums,

 

Out of the $1400 income per month...How much money per month, do you have to put toward paying down these CC's?

FICO's Oct 2013 TU711 EQ713 EX723~~Live below your means and always keep an emergency fund -Love Everybody ~ Big Kenny ~ Big and Rich ~~~~~Credit Scoring 101 - Common Abbreviations - Freq Req Threads - Free Credit Reports - What Steps Do I Take?DV? PFD?
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GNEXUS7
Posts: 3
Registered: ‎06-30-2012
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Re: Would Appreciate Help/Advice paying down debt

Thank you for your response Revelate,

 

Reason for saving money was just have actual cash if needed to fall back on something, maybe i thinking to negative, what's good amount i should actually have saved for emergency, also since im a noob and sure clearly how to work with a CD/Installments(though i am researching after this forum to see how exactly works)

 

I have no major loans or anything else on c.c report, just this 6 cards with late payments from the last 3 years,

 

exactly how far is a BT transfer away if my 9k/12k debt to avalabilty is 75% , and  at what mark would I be able to apply for Card that offers a transfer,

 

I've read some reviews around my city that offers debt consolidation and they seem horrible, if this hassle's than I'll go that route, 

 

I appreciate your responses

 

Thank You,

New Visitor
GNEXUS7
Posts: 3
Registered: ‎06-30-2012
0

Re: Would Appreciate Help/Advice paying down debt

Thank You for your Response LIGHTNIN

 

I'll break down my monthly spending,

 

$350 = Montly C.C payments at min.

$150=Cellular( I just change my plan to 59.99 this comes in effect september i was on a family plan where i cam e to realization is was way too much)

$30=gym

$100=food weekly and only spend about $25.( i don't even it out and bring lunch to work)

$50 =gas a month(i park at a local metro station)

$30 =dollar transit pass

$30=wifi 

$20 on other msic. household items(shampoo,soap and what not)

I avoid places like starbucks and other stop and go places that add up

I do live with a relative(rent free & where buy own necessities )

 

Im really want a to set myself up where i would be good in a finacially in the event i had to move out

 

the phone bill will be a major help, eliminating $90 come by september.

 

I got a total of 760/1400

 

Out of the 640, how much should i save and how much extra should i contribute

 

Thank you

Moderator
Revelate
Posts: 8,938
Registered: ‎12-30-2011
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Re: Would Appreciate Help/Advice paying down debt

[ Edited ]

Your savings rate is less than the interest rate on your cards, so any savings you have right now, is just costing you more money.

 

Pay off your debts, and then start saving.  While I think it's healthy to have a cash reserve, even 1K covers most emergencies I can think of and 2K is probably the most; 5K, that buys a semi-decent used car with cash, not where you want to be when you have a bunch of outstanding debts.

 

The issue is you're paying on the order of 20% interest (for simple math), vs. sitting in a bank account or CD, *maybe* you're making 3% and most are in the 1.7% range.

 

So for every dollar in savings, you're losing $0.014 every month.  It doesn't sound like much, but that turns into $850/year in additional expense you wouldn't have to be paying assuming you keep that $5000 in the bank.   Moving debt around isn't the answer long-term, paying it is.   My recommendation would be to spend 4K paying down your cards now, keeping that 1K reserve, and then using every available dollar extra to keep paying down the debts until they're gone.  At that point you can look around in terms of figuring out savings.

 

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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FrugalRican
Posts: 2,876
Registered: ‎02-02-2012
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Re: Would Appreciate Help/Advice paying down debt

I have to agree with Revelate.

You might be "saving" money, but you're also wasting money with the interest, so you might be spending more money paying off the cards than you are actually "saving" in the bank. You don't have to spend on rent, use this to your advantage.

 

Another recommendation. Use that $90 you aren't going to pay on a phone anymore, and add that to what you can pay.

If it were me, and I didn't have to pay "rent", I'd make up a number per month that I would call "Rent" and just use that to pay everything down. You have some HIGH balances with some hefty interest rates (19%+).

 

And if you don't pay rent, you wouldn't really "need" 5K for an emergency.

Get those cards down as quick as you can, even if it takes you reading some Dave Ramsey or reading harder into these forums, but I can assure you, those Credit Cards are making more money off of you than you could possibly fathom. Just go look at your statements and see how long it would take you to pay off the cards just doing the minimum and how much interest you'd spend overtime and if that doesn't cause fear to creep into your soul and get this down faster, than I don't know what will.

Follow my financial journey: http://www.frugalrican.com


EQ FICO (01/16/2012): 656 - EQ FICO (02/16/2012): 743 - EQ (02/24/2012): 760 - EX (04/28/2012): 739 - GOAL 2013: 800+

AMEX BCE (0/10K) --- BOA 1-2-3 (0/15.9K) --- Discover More (0/6K) --- Chase Freedom Visa (0/1.4K) -- Hyatt Visa Sign. (0/5.8K) -- Barclay's NFL Card (0/7.5K) -- Chase Sapphire Preferred (0/5K)

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LIGHTNIN
Posts: 4,063
Registered: ‎03-24-2008
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Re: Would Appreciate Help/Advice paying down debt

$350 = Monthly C.C payments at min.

$150=Cellular                                                               $60 change effect September 

$30=gym                                                                        $30 gym                                                                                                                                              

$100=food                                                                     $100 food 

$50 =gas a mo                                                             $50 gas

$30 = transit pass                                                       $30 transit pass  

$30=wifi                                                                         $30 wifi

$20 on other misc..                                                      $20 misc.

---------------------------------                                         --------------------     

$410.pre-september expenses                            $320 expenses Sept and later

 

You have $990 to put toward CC debt for Julyand Aug.  And $1080 for the month of Sept and later.

 

I agree with Revelate, "Pay off your debts, and then start saving." 

 

I feel that, IMO that your budget is too thin.

By that I mean, you have no money set aside for clothing,birthday presents or fun and entertainment.

You need to include fun in your budget, because I'm afraid if you don't, you may feel this budget thing is too hard

and will not stick to the plan of paying off  these debts.

Think of it as a reward to yourself, for sticking to your budget.:smileywink:

 

With the $1080 left per month, I would put about $900 toward the CC debt, you should have it paid in no time. Woo Hoo!!

Then what's left over is about $180 put toward fun,clothing and presents.

IMO, I would keep the 5K liquid, somewhere you can get to in a hurry, if needed to.

I lean toward the attitude, " it's better to be safe, then sorry".

 

Rule of thumb with emergency funds is....... How many months will it take to find a new job ,if you lost the current one?

You take the answer to that question, times your monthly expenses, that's what you need for an emergency fund.

Sorry for not replying earlier, bad shoulder flared up so typing is kind of difficult.

Ok, you have now a couple of ideas, make a plan that will fit you and come back here next month to let us know how you are doing.

FICO's Oct 2013 TU711 EQ713 EX723~~Live below your means and always keep an emergency fund -Love Everybody ~ Big Kenny ~ Big and Rich ~~~~~Credit Scoring 101 - Common Abbreviations - Freq Req Threads - Free Credit Reports - What Steps Do I Take?DV? PFD?
Valued Contributor
rckstrscott
Posts: 2,659
Registered: ‎04-25-2011
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Re: Would Appreciate Help/Advice paying down debt


Revelate wrote:

Your savings rate is less than the interest rate on your cards, so any savings you have right now, is just costing you more money.

 

Pay off your debts, and then start saving.  While I think it's healthy to have a cash reserve, even 1K covers most emergencies I can think of and 2K is probably the most; 5K, that buys a semi-decent used car with cash, not where you want to be when you have a bunch of outstanding debts.

 

The issue is you're paying on the order of 20% interest (for simple math), vs. sitting in a bank account or CD, *maybe* you're making 3% and most are in the 1.7% range.

 

So for every dollar in savings, you're losing $0.014 every month.  It doesn't sound like much, but that turns into $850/year in additional expense you wouldn't have to be paying assuming you keep that $5000 in the bank.   Moving debt around isn't the answer long-term, paying it is.   My recommendation would be to spend 4K paying down your cards now, keeping that 1K reserve, and then using every available dollar extra to keep paying down the debts until they're gone.  At that point you can look around in terms of figuring out savings.

 

 



I understand where the OP is coming from; but Revelate is right..

 

This is a lesson I just learned myself... It is funny to think that sometimes you need to actually step back and look at the finances from a far..

 

I had 8k in debt on 29 percent cards and I had 5k in the bank... I have never had savings, so it felt GREAT to have that money.. but I was losing SO much in interest...

 

It is quite simple. I would actually sink EVERY dollar I had into the debt, I wouldn't even keep a reserve.. What can you do with the 5k cash that you couldnt have done after the fact if you paid down your cards? Lets say you needed to make a 3k purchase, well, you can always go right back to the card since it will be avail; only now you have saved the interest you paid over the course of XYZ months and years..

 

I sunk the entire 5k into my debt, and it has saved me so much in interest and monthly payments... I am only 2k away from being outta the credit hole, then I can start saving and do what you THINK you are doing right now.

 

-scott

Starting FICO Score: 10/10: TU 498 | EQ: 502 Current FICO Score(lender pull): 05/12: TU: 722 | EQ: 712 | EX: 686
Collections Removed: Hunter Warfield, CBE Group, Merchants Credit Guide, EOS-CCA, Enhanced Recovery, Portfolio Recovery, UCB, American Collection Company, Medical Business Bureau, Jefferson Capital, Credit Portfolio Associates, FCO, LVNV, Convergent, Armor Systems
Other Negative Entries Removed:Plains Commerce CO, HSBC CO, 2008 Judgment Santander Reposession

Still Working On: Illinois Paid Tax Lien,
Positive Accounts:10/10: 0 | 07/12: 6 | Mortgage Closed 5/12, Macy's AMEX $3900, Citi/Home Depot $2000, Capital One Cash Rewards $1500, Capital One Secured $500, Credit One Bank $500. Total Utilization: 6%. AAoA: 1yr, 7mth. INQS: 8 TU, 8 EQ, 4 EX
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FrugalRican
Posts: 2,876
Registered: ‎02-02-2012
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Re: Would Appreciate Help/Advice paying down debt

I would agree with LIGHTNIN if it weren't for the fact that the OP doesn't pay rent, which indicates to me that he is staying with family, which in that case... to me the rules change when it comes to reserves. 5K is definitely more than 6 months in reserves for someone who doesn't pay rent but only pays utilities.

 

He can build it back up faster once he's not paying principal and interest on credit cards.

 

But that's just my opinion and this is very subjective.

Follow my financial journey: http://www.frugalrican.com


EQ FICO (01/16/2012): 656 - EQ FICO (02/16/2012): 743 - EQ (02/24/2012): 760 - EX (04/28/2012): 739 - GOAL 2013: 800+

AMEX BCE (0/10K) --- BOA 1-2-3 (0/15.9K) --- Discover More (0/6K) --- Chase Freedom Visa (0/1.4K) -- Hyatt Visa Sign. (0/5.8K) -- Barclay's NFL Card (0/7.5K) -- Chase Sapphire Preferred (0/5K)


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