cancel
Showing results for 
Search instead for 
Did you mean: 

MYFICO fam; my DD needs CC/debt makeover PLS

tag
CreditobsessedinFL
Established Contributor

MYFICO fam; my DD needs CC/debt makeover PLS

EDIT: UPDATE 6/25/20

DD utilization is down to 51% and she just crossed into the 700 club, her score is now 701 Woohoo!!! Thanks for all the guidance that got her to this milestone and she isn't done yet!!!

 


EDIT: UPDATE on DD rescue opp 2.14.2020

Thank you to all who weighed in, gave us constructive advice and concrete steps to follow. This was month one of Operation DD CC rescue. She is determined to pay her CCs off, learn how to manage credit and be able to move out! 

We paid her cc's as directed below. We (she) gave the AU an ultimatum, pay your balance and the card is cut off.  After applying the partial balance payment from said AU to that specific card, as directed,  her OVERALL utilization went down by 4% for this period. Additionally, she logged into her email, and low and behold, after this payment to Discover, they increased her CL by 2k, which will also help ease her overall untilization.  We are working the plan...thanks again.    

 

 

I have been lurking and learning and would like the MF fam's advice on the best way to attack my DD cc/debt issues.  She is a recent college grad who started college with ONE credit card, a Discover.  She managed it well and upon returning from her semester abroad, she acquired a Chase Freedom and a Bloomingdale's. She graduated with 0 student loans, she got a job, leased her first car, got an Amex GC but in the course of acquiring a "work wardrobe",  she said " IDK why, but they kept raising my limits" and she basically lost her F%$ mind, I guess. On another note and a post for another day, she has another family member's stuff on her cc (not me) to the tune of 2k on the Chase card, which I keep telling her she needs to get them to pay ASAP and cut them off, because she is paying interest every month on their charges. 

 

FF, while she has a stellar payment history for her accounts and NO baddies, she has managed to rack up a staggering amount of cc debt, IMO.  She recently took out a BT Bofa for 1/2 of her largest card.  This week,  her computer's ( which she  DEF needs for work) Motherboard died the other day and she was able to put the new one on a Apple CC with 0% for 18 mos. versus her AMEX which would be due next month or another one of the cards with much higher interest rates.

 

Sooo...  I convinced her to move back home (0 living expenses) in an effort to pay it down, try to increase her savings, create an emergency fund and eventually move out on her own.  I am on a rebuilding path myself, so offered to cover groceries and even her gas, if necessary and thus the reason for my post; can you please weigh in on the "best" method of attack; snowball, avalanche or PLOC from a credit union and a realistic timeframe to propose to her  ?  Obviously she has STOP spending and she must pay off the Amex and possibly the Bloomingdale's this month.   

EXP-685

EQ-666

TU-698

 Utilization- 61% of available credit ($33,300) 

I created a spreadsheet the cards and balances below, DOB is the orgination date of the BT/Apple and DOD is the expiration date of the 0% :   

 

jaye spreadsheet (2).png

 Any advice is greatly appreciated and she is receptive, the first step is asking for the help. 

 

11 REPLIES 11
Anonymous
Not applicable

Re: MYFICO fam; my DD needs CC/debt makeover PLS


@CreditobsessedinFL wrote:

I have been lurking and learning and would like the MF fam's advice on the best way to attack my DD cc/debt issues.  She is a recent college grad who started college with ONE credit card, a Discover.  She managed it well and upon returning from her semester abroad, she acquired a Chase Freedom and a Bloomingdale's. She graduated with 0 student loans, she got a job, leased her first car, got an Amex GC but in the course of acquiring a "work wardrobe",  she said " IDK why, but they kept raising my limits" and she basically lost her F%$ mind, I guess. On another note and a post for another day, she has another family member's stuff on her cc (not me) to the tune of 2k on the Chase card, which I keep telling her she needs to get them to pay ASAP and cut them off, because she is paying interest every month on their charges. 

 

FF, while she has a stellar payment history for her accounts and NO baddies, she has managed to rack up a staggering amount of cc debt, IMO.  She recently took out a BT Bofa for 1/2 of her largest card.  This week,  her computer's ( which she  DEF needs for work) Motherboard died the other day and she was able to put the new one on a Apple CC with 0% for 18 mos. versus her AMEX which would be due next month or another one of the cards with much higher interest rates.

 

Sooo...  I convinced her to move back home (0 living expenses) in an effort to pay it down, try to increase her savings, create an emergency fund and eventually move out on her own.  I am on a rebuilding path myself, so offered to cover groceries and even her gas, if necessary and thus the reason for my post; can you please weigh in on the "best" method of attack; snowball, avalanche or PLOC from a credit union and a realistic timeframe to propose to her  ?  Obviously she has STOP spending and she must pay off the Amex and possibly the Bloomingdale's this month.   

EXP-685

EQ-666

TU-698

 Utilization- 61% of available credit ($33,300) 

I created a spreadsheet the cards and balances below, DOB is the orgination date of the BT/Apple and DOD is the expiration date of the 0% :   

 

jaye spreadsheet (2).png

 Any advice is greatly appreciated and she is receptive, the first step is asking for the help. 

 


Obviously the Amex Gold is due in full and is #1. And as you said, the Bloomingdales has to be paid down (in full), I would recommend that next anyway, since it is a quick hitter. 

 

The next ones do not seem to be difficult to prioritize, since the balances are all close. Pay just above  the minimum on the 0% card(s), while applying the largest payments to the card with the highest APR. Of course, the others have to be paid as well, and maybe a little more than the minimum as well in order to keep the creditors from freaking out. Once one of the cards is knocked out, that payment amount from that paid off card is applied in addition to the next highest APR card's payment amount. This will accelerate the pay down process as well as minimize interest. 

 

And when the next card gets paid off, the amount (which was 2 card payments) is now applied to the next card. This will be a high amount, since it is like 3 card payments. It really accelerates at this point.

 

If the 0% expires, then you rank it by APR with the rest of the card APRs and begin attacking that before the others if the APR is higher than the others.

 

What she got going for her is a high income. You are doing a good thing in helping her pay down quickly by having her live at home.

 

If she is like most others in her age range, she won't like it much living st home and that may help her realize the magnitude of what she has done and may think twice about it next time.

 

Good luck. 

Message 2 of 12
Anonymous
Not applicable

Re: MYFICO fam; my DD needs CC/debt makeover PLS

I want to add, the payment amount for the card with the highest APR shouldn't be anywhere close to the minimum paymen. It should be the highest amount she can afford to do.

Message 3 of 12
CreditobsessedinFL
Established Contributor

Re: MYFICO fam; my DD needs CC/debt makeover PLS

Thank you so very much: I just wanted to have a definitve plan of attack for her to follow and I felt that since I am late to the MyFico party, and working on my credit goals, the forum could give her excellent advice, quickly.  Also, since it is the beginning of the month, she can get started sooner rather than later.

Lol, @cardnut, you are 100% are correct, she said living at home is "motivation" to get her finances in order!   

Message 4 of 12
ChargedUp
Senior Contributor

Re: MYFICO fam; my DD needs CC/debt makeover PLS


@CreditobsessedinFL wrote:

I have been lurking and learning and would like the MF fam's advice on the best way to attack my DD cc/debt issues.  She is a recent college grad who started college with ONE credit card, a Discover.  She managed it well and upon returning from her semester abroad, she acquired a Chase Freedom and a Bloomingdale's. She graduated with 0 student loans, she got a job, leased her first car, got an Amex GC but in the course of acquiring a "work wardrobe",  she said " IDK why, but they kept raising my limits" and she basically lost her F%$ mind, I guess. On another note and a post for another day, she has another family member's stuff on her cc (not me) to the tune of 2k on the Chase card, which I keep telling her she needs to get them to pay ASAP and cut them off, because she is paying interest every month on their charges. 

 

FF, while she has a stellar payment history for her accounts and NO baddies, she has managed to rack up a staggering amount of cc debt, IMO.  She recently took out a BT Bofa for 1/2 of her largest card.  This week,  her computer's ( which she  DEF needs for work) Motherboard died the other day and she was able to put the new one on a Apple CC with 0% for 18 mos. versus her AMEX which would be due next month or another one of the cards with much higher interest rates.

 

Sooo...  I convinced her to move back home (0 living expenses) in an effort to pay it down, try to increase her savings, create an emergency fund and eventually move out on her own.  I am on a rebuilding path myself, so offered to cover groceries and even her gas, if necessary and thus the reason for my post; can you please weigh in on the "best" method of attack; snowball, avalanche or PLOC from a credit union and a realistic timeframe to propose to her  ?  Obviously she has STOP spending and she must pay off the Amex and possibly the Bloomingdale's this month.   

EXP-685

EQ-666

TU-698

 Utilization- 61% of available credit ($33,300) 

I created a spreadsheet the cards and balances below, DOB is the orgination date of the BT/Apple and DOD is the expiration date of the 0% :   

 

jaye spreadsheet (2).png

 Any advice is greatly appreciated and she is receptive, the first step is asking for the help. 

 


How much of the $4083 is she able to put towards the cards? If you're supplying meals and gas, lets say ~$2500?

 

0. Take away any AU cards from relatives/friends/etc. Collect on those debts and pay towards largest balance at the time.

1. Kill Amex and Bloomies this month to get those out of the way. Cover minimums on the rest.

2. If BoA is 0%, Concentrate on Sapphire. $1800/month and that will be paid off in 6 months (with interest).

3. Discover next, this will take about 4 months @ $1800/month with some left over the last month.

4. You're nearing the end of your BoA 0% BT at this time, see if Sapphire or Discover have 0% BT offers. (They usually do.) BT ½ of BoA to Chase and ½ to Discover if possible to keep UTI lower. $900/ month on each or $1800 if it all goes on one card. Continue until PIF.

5. Finish paying off Apple and make larger payments on the VW to get that out of the way.

 

It'll take about 18-20 months, but this is doable.

 

Message 5 of 12
CreditobsessedinFL
Established Contributor

Re: MYFICO fam; my DD needs CC/debt makeover PLS

Roger that.  I am printing  this thread and putting it on her bed.  WIll report back with our progress, thanks again. 

Message 6 of 12
CreditobsessedinFL
Established Contributor

Re: MYFICO fam; my DD needs CC/debt makeover PLS

Wow! 

Thanks @chargedup, agreed, she should have AT LEAST $2,500.00 to put towards this, once she knocks out the AMEX balances (statement and total), and Bloomies and SDs them. 

That AU thing is a mess, but I told her, she MUST do it, it is costing her to carry their rolling balances and interest. 

Correct, I offered the option to work for me as well, as her schedule permits, and then ghost those associated expenses (gas, meals, etc.) during the next few months so she can spend all her money on knocking down her debt and give her AMEX a break.

As her work wife now AND her mom, I doubt she wants to be on the couch for 18 mos.  I bet she will get it together, post haste!  

 

 

Message 7 of 12
Anonymous
Not applicable

Re: MYFICO fam; my DD needs CC/debt makeover PLS


@CreditobsessedinFL wrote:

Roger that.  I am printing  this thread and putting it on her bed.  WIll report back with our progress, thanks again. 


Yes, if she can get any balance transfers or lowered APRs, then the card priority will shift to the highest APR card. It is certainly doable especially with her income and living at home.

 

Believe it or not,  just had a similar discussion at home with my wife. Her daughter is 18 and off to college next fall. She just opened her first credit card, a DISCOVER student with a $1K limit. My wife will hold the card and give it to her 1 day a month to make 1 purchase, then take it back again. She'll have to pay it in full,  then get the card back again for 1 purchase and repeat the process in order to build a credit history.

 

She too is expected to graduate with no loans. That might put the thought in her head that since she'll have no loans, she can spend on cards in college. My wife is afraid if she kept the card in her posession even now that she'd run up the balance. But it will be in her possession when she does go to college and the fear is she'll run it up and open new accounts lol. Sound familiar? 

 

I won't tell my wife about this scenario as it might frighten her lol. But she realizes it's a good idea for her daughter to establish credit now for the future. But I think this situation isn't that uncommon. 

Message 8 of 12
seattletravels
Valued Contributor

Re: MYFICO fam; my DD needs CC/debt makeover PLS

I agree with what's been said already.

1. Pay Amex + Bloomingdales
2. Knock out the Chase
3. Knock out Discover
4. B of A (balance transfer to low APR if possible)


Last App: BECU 02-26-2020
Pronouns: He/Him/His
Message 9 of 12
CreditobsessedinFL
Established Contributor

Re: MYFICO fam; my DD needs CC/debt makeover PLS

I agree with you and my cautionary tale might be TMI for your wife, LOL!

It is a slippery slope; our DD and DS need a  CC when they leave home and it is important for them to begin building their own credit, we just don't want them to destroy it out of the gate.  Had I had an Amex at the time, I would have gone that route with a preset limit for her that I could monitor her spending, but hindsight is 20/20 and I was treading water credit wise and holding on for dear life myself at the time, trying to make sure that she would graduate without any student loan debt.   I am SO grateful that she is responsible and at least she listened to my mantra of how important it is to protect your credit and to always pay on time.   I did NOT know that she was getting more credit cards and shopping with abandon, and that said credit cards were giving out auto CLIs, like candy to college kids.  I have read more about it now and "preemptive" CLI are more common practice with credit card companies; https://www.thepennyhoarder.com/bank-accounts/credit-card-limit-increase-without-asking/ . They (cc companies) want you to spend so that they can collect the extortionist interest rates on the balances you inevitably carry over.   They realize that if you typically spend 60% of your CL, if they raise it, you will probably still spend 60% of the new CL too!   This is a valuable lesson for kids starting out and thankfully, she has a job.  She can start to pay them off and begin saving her money, invest in a 401K and start adulting in earnest.  I (we) realize that it could have ended up much differently if she didn't raise her hand for help. I am taking a much more calculated approach to credit and budgeting overall with my younger two, trust me. 

 

"When you know better you do better"- Maya Angelou

 

Thank you and all the other MFico-ers for the sound advice on to how to try to right the ship. 

Message 10 of 12
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.