topic Re: How Should I Tackle $38,000 of Debt? in Personal Finance

How Should I Tackle $38,000 of Debt?

Anonymous — Wed, 17 Jun 2020 08:06:58 GMT

Hi all!

I'm interested in getting ideas on how to go about tackling this debt. I just received a large sign-on bonus with my new employer and will have about $25,000 at my disposal to pay down debt. Between my wife and I, here's a list of our debts in a balance/limit/ format:

Best Buy CC - $4,956/$4650 -$163/month

Barclaycard - $2682/$3000 - $65/month

Care Credit - $2302/2600 - $123/month

Discover - $997/1000 - $84/month

NFCU Platinum - $150/500

NFCU cashRewards - $5492/5500 - $150/month

PayPal Credit - $2456/3000 - $65/month

USAA Signature - $6433/6500 - $147/month

Apple Card - $1000/1000 - $35/month

Upstart Loan - $11,700 - $372/month

Any advice is appreciated! We definitely got ourselves into a bit of a mess after being unemployed for the last 5 months. We'd like to increase our scores as much as possible (currently low 600s) while lowering our monthly obligation.

Re: How Should I Tackle $38,000 of Debt?

Jnbmom — Wed, 17 Jun 2020 08:10:05 GMT

@Anonymous wrote:
Hi all!
I'm interested in getting ideas on how to go about tackling this debt. I just received a large sign-on bonus with my new employer and will have about $25,000 at my disposal to pay down debt. Between my wife and I, here's a list of our debts in a balance/limit/ format:

Best Buy CC - $4,956/$4650 -$163/month
Barclaycard - $2682/$3000 - $65/month
Care Credit - $2302/2600 - $123/month
Discover - $997/1000 - $84/month
NFCU Platinum - $150/500
NFCU cashRewards - $5492/5500 - $150/month
PayPal Credit - $2456/3000 - $65/month
USAA Signature - $6433/6500 - $147/month
Apple Card - $1000/1000 - $35/month
Upstart Loan - $11,700 - $372/month

Any advice is appreciated! We definitely got ourselves into a bit of a mess after being unemployed for the last 5 months. We'd like to increase our scores as much as possible (currently low 600s) while lowering our monthly obligation.

First question is what are the rates on the above accounts? Any BT rates and if so when do they expire?

Re: How Should I Tackle $38,000 of Debt?

Anonymous — Wed, 17 Jun 2020 11:38:03 GMT

Is your goal to pay them ALL off as quickly as possible or just lower your monthly obligation? I'm going to assume you want to pay it all off as soon as possible.

I would list smallest to largest (you can change order if you prefer) and pay off in that order. You would be left with the Upstart and about a third of USAA. Right now you pay about $1200 in minimum payments a month. I'd keep allocating that $1200 a month and any extra in the budget until it is all paid off. $13k balance with $1200+ going towards shouldn't take you very long to clear.

Congratulations on the new job!

Re: How Should I Tackle $38,000 of Debt?

SouthJamaica — Wed, 17 Jun 2020 13:03:39 GMT

@Jnbmom wrote:
@Anonymous wrote:
Hi all!
I'm interested in getting ideas on how to go about tackling this debt. I just received a large sign-on bonus with my new employer and will have about $25,000 at my disposal to pay down debt. Between my wife and I, here's a list of our debts in a balance/limit/ format:

Best Buy CC - $4,956/$4650 -$163/month
Barclaycard - $2682/$3000 - $65/month
Care Credit - $2302/2600 - $123/month
Discover - $997/1000 - $84/month
NFCU Platinum - $150/500
NFCU cashRewards - $5492/5500 - $150/month
PayPal Credit - $2456/3000 - $65/month
USAA Signature - $6433/6500 - $147/month
Apple Card - $1000/1000 - $35/month
Upstart Loan - $11,700 - $372/month

Any advice is appreciated! We definitely got ourselves into a bit of a mess after being unemployed for the last 5 months. We'd like to increase our scores as much as possible (currently low 600s) while lowering our monthly obligation.
First question is what are the rates on the above accounts? Any BT rates and if so when do they expire?

1. Don't worry about the loan; just keep paying it like usual.

2. Concentrate on getting all the revolvers down to 28% or less.

3. Then start zeroing out the accounts with the highest interest.

Congratulations on getting a sign-on bonus! No one ever liked me that much

Re: How Should I Tackle $38,000 of Debt?

Harvey26 — Wed, 17 Jun 2020 15:08:04 GMT

@Anonymous wrote:
Hi all!
I'm interested in getting ideas on how to go about tackling this debt. I just received a large sign-on bonus with my new employer and will have about $25,000 at my disposal to pay down debt. Between my wife and I, here's a list of our debts in a balance/limit/ format:

Best Buy CC - $4,956/$4650 -$163/month
Barclaycard - $2682/$3000 - $65/month
Care Credit - $2302/2600 - $123/month
Discover - $997/1000 - $84/month
NFCU Platinum - $150/500
NFCU cashRewards - $5492/5500 - $150/month
PayPal Credit - $2456/3000 - $65/month
USAA Signature - $6433/6500 - $147/month
Apple Card - $1000/1000 - $35/month
Upstart Loan - $11,700 - $372/month

Any advice is appreciated! We definitely got ourselves into a bit of a mess after being unemployed for the last 5 months. We'd like to increase our scores as much as possible (currently low 600s) while lowering our monthly obligation.

I would pay off everything besides the USAA credit card and Upstart loan. I would make a payment of 3433 on USAA and bring that to 3000. Once all that is paid you will have about 1700 bucks left, I would throw that in a savings and let all these balances update and use the money that you have been paying towards them to get your USAA paid off if you pay 500 a month you could knock it out in 6 months and then I would start on the upstart loan and get that paid off as quickly as possible. Congrats on your new job! Make sure you use this as a learning lesson to not get back in that situation again. This is a once in a lifetime chance use it wisely!

Re: How Should I Tackle $38,000 of Debt?

Anonymous — Wed, 17 Jun 2020 17:08:46 GMT

Thanks for the insight everyone! I'm glad I asked, I was about to pay off the personal loan and go from there. I guess the CCs all have higher interest rates so that makes sense.

To answer the interest question, my USAA card is 15%, NFCUs both at 18%, Apple Card at 18% and the rest are around 28%. I like the idea of paying everything off and paying down the USAA, though I wonder if paying everything down to below 30% utilization then knocking each out one by one after will increase my score more....

Re: How Should I Tackle $38,000 of Debt?

Anonymous — Wed, 17 Jun 2020 20:53:37 GMT

Getting every account down to 27% at most will drop your individual and aggregate usage percentages through several scoring tiers, and should get them low enough that if they aren't paid off, when interest hits at the next statement, you should stay below 28.9% (which is a scoring breakpoint). I agree with the above that getting the cards knocked down and out while letting the loan ride is the best route to score improvement. Ideally you'll carry a zero balance on every card but one, with that one reporting $10-15 at statement cut, and a loan with a residual of less than 9% of the borrowed balance. That's the holy grail portfolio position for scoring.

Re: How Should I Tackle $38,000 of Debt?

SouthJamaica — Wed, 17 Jun 2020 21:23:37 GMT

@Anonymous wrote:
Thanks for the insight everyone! I'm glad I asked, I was about to pay off the personal loan and go from there. I guess the CCs all have higher interest rates so that makes sense.

To answer the interest question, my USAA card is 15%, NFCUs both at 18%, Apple Card at 18% and the rest are around 28%. I like the idea of paying everything off and paying down the USAA, though I wonder if paying everything down to below 30% utilization then knocking each out one by one after will increase my score more....

That's actually not the reason I advised tackling the revolvers first. I didn't know what your respective interest rates were. The reason I advised that was that it accomplishes more for your credit scores to get the revolvers down.

Re: How Should I Tackle $38,000 of Debt?

Credit4Growth — Wed, 17 Jun 2020 23:05:07 GMT

@Harvey26 wrote:
@Anonymous wrote:
Hi all!
I'm interested in getting ideas on how to go about tackling this debt. I just received a large sign-on bonus with my new employer and will have about $25,000 at my disposal to pay down debt. Between my wife and I, here's a list of our debts in a balance/limit/ format:

Best Buy CC - $4,956/$4650 -$163/month
Barclaycard - $2682/$3000 - $65/month
Care Credit - $2302/2600 - $123/month
Discover - $997/1000 - $84/month
NFCU Platinum - $150/500
NFCU cashRewards - $5492/5500 - $150/month
PayPal Credit - $2456/3000 - $65/month
USAA Signature - $6433/6500 - $147/month
Apple Card - $1000/1000 - $35/month
Upstart Loan - $11,700 - $372/month

Any advice is appreciated! We definitely got ourselves into a bit of a mess after being unemployed for the last 5 months. We'd like to increase our scores as much as possible (currently low 600s) while lowering our monthly obligation.
I would pay off everything besides the USAA credit card and Upstart loan. I would make a payment of 3433 on USAA and bring that to 3000. Once all that is paid you will have about 1700 bucks left, I would throw that in a savings and let all these balances update and use the money that you have been paying towards them to get your USAA paid off if you pay 500 a month you could knock it out in 6 months and then I would start on the upstart loan and get that paid off as quickly as possible. Congrats on your new job! Make sure you use this as a learning lesson to not get back in that situation again. This is a once in a lifetime chance use it wisely!

Agreed!

Overall, his cmments resoundnates with my opinion. It sounds full of experienced thought & makes a lot of sense!

Re: How Should I Tackle $38,000 of Debt?

Harvey26 — Wed, 17 Jun 2020 23:11:34 GMT

@Anonymous wrote:
Thanks for the insight everyone! I'm glad I asked, I was about to pay off the personal loan and go from there. I guess the CCs all have higher interest rates so that makes sense.

To answer the interest question, my USAA card is 15%, NFCUs both at 18%, Apple Card at 18% and the rest are around 28%. I like the idea of paying everything off and paying down the USAA, though I wonder if paying everything down to below 30% utilization then knocking each out one by one after will increase my score more....

If you follow my advice you should be at least a 680 or better once all of that debt is paid down. At this point unless you are going to by a home then scores are really not a concern at the moment. Of course by keeping the installment loan and paying that monthly your score will benefit from that.

Re: How Should I Tackle $38,000 of Debt?

Credit4Growth — Wed, 17 Jun 2020 23:14:22 GMT

@Anonymous wrote:
Thanks for the insight everyone! I'm glad I asked, I was about to pay off the personal loan and go from there. I guess the CCs all have higher interest rates so that makes sense.

To answer the interest question, my USAA card is 15%, NFCUs both at 18%, Apple Card at 18% and the rest are around 28%. I like the idea of paying everything off and paying down the USAA, though I wonder if paying everything down to below 30% utilization then knocking each out one by one after will increase my score more....

yes, doing that would increase your score, however the magic #/threshold is about 28%, not 30%

For more, or a higher impact of on your credit.... InTheDevil & South... have already layed out better suggestions that will:

1. raise your scores faster

2. Free up more of your cash flow that you have been paying out over recent months which will make you feel as if you have more money in your household each and every month.

To me, it is as if I would acquire additional peace of mind and could definitely handle the remainder of my bills with ease!

- Cheer & congrats on the sign-up bonus!