Need some advice

[Mikkel3906]

What method would you use to tackle this debt? Right now I have 4 debt's, but I want to pay them all off as quickly as possible. The method I currently use to pay down debt is called velocity banking. It actually does work to help you pay down debt fast when you have ever changing income from several sources at once, but you also want to pay off the max possible that you can torwards your debt each month. There is no more guessing at how much you can pay torwards your debt each month. It acts like zero based budgeting by putting the max you can torwards your debt each month, then using a revolving line of credit.

Anyway here are my debts. In what order would you recommend paying these off?

$314.69 (revolving LOC) - Credit Card 1 (29.99%) $10.86 in interest

$346.27 (non-revolving) - Car Repair Loan (71.08%) $38.53 in interest

$2322.14 (revolving LOC on home repair services only) - Home Repair Loan 0% for 60 months 

$797.85 (revolving LOC) - Credit Card 2 (23.49%) $15.62 in interest

Before I started using velocity banking I used to always make an extra payment of $353 which would bring my total debt payout to $604.74 per month before I started maximizing the max payoff by using velocity banking. Out of my full $60,000 in available credit I only use $3.9K so my utilization is relatively low in usage. Still I am unsure what the best method is to pay these off when trying to get out of debt fastest.

I feel as though paying down the revolving LOC's first for general purpose use serves me best. Since I use them like a checking account through the month, but I would like to hear from others how you would recommend paying off these 4 debt's. The small amount of interest doesn't really impact my choice when choosing to use velocity banking, but I do somewhat feel it would be better to just eliminate the smaller debt's altogether just so I don't have to focus on paying off so many bills a month. However I would like to know how you would recommend paying down this debt. I have really been considering getting a balance transfer card for 0% apr or a personal loan just so I am not having to pay 4 different lenders a month. Not sure I want the ding to my credit when my score is good. Let me know what method you think is best to pay down this debt. Thanks

Ontop of the $604.74 I pay for torwards debt each month I also throw an additional $100.00 torwards the $346 71.08% car repair loan and $100.00 torwards $314 credit card 1 every two weeks. If I get a windfall I throw it all torwards my debt divided by 50% each over the car repair loan and credit card 1. I plan to use my 2026 tax refund to knock out the $2402 home repair loan if it even still exists by then. By my estimates if I just kept paying $353.00 a month and I didn't use velocity banking I would be debt free by march 2026. With velocity banking by maximizing debt payout and no guess work I am thinking only 6-8 months or even less. Since my paychecks and other income sources are ever changing and never a set value velocity banking works wonders to put every single dollar I can into crushing debt. Eventhough I have about $60K in credit if I ever need it, I only use $3.9K.

I mainly just want to see what paydown order and strategy is recommended by most for the 4 debt's. I could do snowball. I could do avalanche. I could divide my debt paydown strategy by using 25% of my paycheck torwards each debt. As I mentioned I hate having to pay 4 different lenders a month, but I do think maximizing the revolving LOC's first is a good strategy since they act as a revolving checking account.

[Vinjints]

You need to knock that 70% interest loan out immediately. Then, personally, the other 300 card just to get rid of it. I don't see any reason to divvy up additional payments across lines. 

[Kforce]

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@Vinjints wrote:

You need to knock that 70% interest loan out immediately. Then, personally, the other 300 card just to get rid of it. I don't see any reason to divvy up additional payments across lines. 

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This ^^^^

Pay highest interest first, then next.

If you have 600 / month, this is only 7-8 months to have it all paid off.

[Mikkel3906]

Thank you guys that is what I was thinking too, but I wanted be sure. I will payoff the 71.08% loan and the other $314.00 credit card completely on my next payday. Just this month alone I have thrown $1963 from windfalls and velocity bankings method at debt. I now have my mortgage paid ahead for 2-3 months. So I can repeat this each month. I will be hitting this debt very hard. Looking forward to being debt free by september or maybe even earlier.

[ptatohed]

Financially, avalanche wins every time. Quicker and cheaper. Snowball should only be used when someone needs it, psychologically. Those aren't huge debts. Knock them out! You can do it!

But do stop spending on your CCs until everything is paid off. Then PIF when you start using CCs again. Good luck.

[TrapLine]

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@ptatohed wrote:
Financially, avalanche wins every time. Quicker and cheaper. Snowball should only be used when someone needs it, psychologically. Those aren't huge debts. Knock them out! You can do it!

But do stop spending on your CCs until everything is paid off. Then PIF when you start using CCs again. Good luck.

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Good advice here! Pay off debt and breathe 

[Mikkel3906]

I knocked out that $346.00 car repair loan at 71.08% and my upgrade loan $336.00 at 29.99%, then socked away the rest for my emergency fund. Now I can focus each credit card with a $1,000.00 payment every two weeks. One is $1239.06 (40% CU) 23.49% and the other is $2322.87 0%  (52% CU).

My question is related to the steps I can take for an event which recently happened about 4-5 months ago.

I set my chase credit card up for autopay, but accidently chose pay off the balance in full instead of choosing to pay the minimum payment at that time. So chase hit my card for $2,465.00 about four or five months ago. It turns out this happened on the statement closing date as luck would have it so to the credit bureau this was reported as paid off. The problem is this drained my account where I could not pay the mortgage so I called chase and told them I needed that reversed asap and to keep the minimum payment from it. My fico 8 credit score took a 12 point hit when this was reversed due to my previously reported paid off balance 6 days later now showing $2275.00 again. What can I do to fix this mistake and get it removed from my credit report to get those 12 points back. What steps can I take. It takes years to raise a fico credit score and I lost 12 points just for choosing the wrong autopay option.

[FicoMike0]

What to you want removed, that you pifed, which you say you did, or that you reversed a payment and ran the balance back up, which you also say you did? They're not likely to remove info that you admit is true. 

I wouldnt worry, your score should recover when the dust settles. It doesn't take any time at all to see a 12 point swing.

As far as your first post, I'm glad you got that 71% loan paid off. You could do better with a loan shark. 

[Thomas_Thumb]

Good advice in the above posts. Just be careful to avoid any late payments as you progress through this process.

[1lifeisworthit]

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@ptatohed wrote:
Snowball should only be used when someone needs it, psychologically.

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Not true. The better reason to Snowball would be to eliminate payments. Sometimes people get into a place where they can't make all their payments every month. Or their income has gone from steady to variable. So any and all extra should be put on lowest balances to eliminate payments.

Then once they can afford all their payments, then switching to Avalanche is not only doable, but as you pointed out, best.

That's a far better reason than someone "needs it, psychologically"