Help me pay off debt & figure out finances please *UPDATE* at end

[Anonymous]

Hi all! Im Jenn, 30yo newer nurse, and im finalllly "growing up" as far as finances go. I was never taught how to use credit, save money, plan for emergencies, retirement, etc like most of my generation. Luckily, ive become addicted to myfico over the past year! 😉

When I first started, i got too addicted to getting credit cards and used them for xmas & other frivolous spending (never again, I swear im smarter now). Now the amount of my savings acct & 401k gets me more excited than new "stuff". I have improved by leaps & bounds in how i treat credit, and any purchase i make immediately gets pif (but i have old balances still). I need some advice and help making some financial plans. I will take any advice and feel free to be honest or blunt.
A few questions-
1) i have an extra $1500 this month, on top of my usual payments/bills. How should i use this to paydown the following cc debt:
Balance/limit. APR
Walmart 764.95/1300 22.90
Macys 451.55/600 24.50
Overstock 321.32/1150 26.99
Kay jewelers 204.32/3800. 24.99
Avenue 34/650. 24.99
Victorias secret 95.79/950. 24.99
Lowes 90.95/800. 24.99
Amazon 162.16/3500. 0% til 9/15
Cap one QS 714.40/750 0% 12/15
Cap one QS 995.20/2000. 22.90
Discover 711.87/1500 0% til 1/16

The last two (QS & disc) are my pif cards that i utilize for all bills and gas/groceries. And most of the time, Avenue, VS, amazon are a 0 balance, and no matter what ill pif on payday (Thursday). I use approx $300/month to pay off debt, not counting what i pif obviously.

Wow this is humiliating! But taking responsibility for my irresponsible behavior in the past feels good. Ive had alot of fun paying down some of my cards. My scores are already improving. I only carry two cards on me now, and after this payment, will NOT rack up more charges. I am 100% committed to this process. In fact, i will probably close most store cards once my utilization is better. I want cc & rewards to work for me, not me for them.

I started in 7/2014 with a 561 eq. I am now near 650 on all three bureaus with only "one" negative acct (united illuminating 120days LATES- multiple, but none in past year, and after one more payment, acct will be at 0 from 3,000, then just a monthly bill! I payed $250/mth until caught up).
Question 2) anyone ever had any gw success with United Illuminating for removing old lates? Sad really, because this one baddie of mine originated because my mom put the electricity in my name, when my dad was sick. I only looked into fixing it this past year. So much damage is done.

Question 3) I contribute to my 401k, up to 3000 now. Should i take a loan out to payoff debt? I could have it automatically taken out of my checks to payback. Didnt wanna touch it though. Unless urgent, which its not. Im confident i can chip away at the debt without it.

I need this debt gone so i can finally save for emergencies, then save for a car down payment, & in the future save for a house down payment. I want to do this now, so when the time comes, i am financially stable

Income~51000

If you read this, thank you! I am amazed at the support here and i try to contribute. I am grateful for any advice. Thank you!

[Anonymous]

Mods- feel free to move this, as I couldn't decide where to post it. Thanks

[tufa4311]

Ok, first based on interest:

	Balance	Credit Line	UTIL	APR	PAY	New Balance	New UTIL
overstock	321	1150	27.9%	26.99	321	0	0
kay	204	3800	5.4%	24.99	204	0	0
avenue	34	650	5.2%	24.99	34	0	0
victoria secret	95	950	10.0%	24.99	95	0	0
lowes	90	800	11.3%	24.99	90	0	0
macys	451	600	75.2%	24.5	451	0	0
walmart	764	1300	58.8%	22.9	305	459	35.31%
cap one	995	2000	49.8%	22.9	0	995	49.75%
amazon	162	3500	4.6%	0	0	162	4.63%
cap one	714	750	95.2%	0	0	714	95.20%
discover	711	1500	47.4%	0	0	711	47.40%
					1500	3041	remaining

Next, let's say you borrow $3000 from your 401K, which has a modest 7% return, compound interest nevertheless, pay off your tradelines that can go as high as 23% APR and begin an agressive auto-paycheck deduction payback plan into your 401K. When I say agressive, I mean all you can handle, if you are going to put yourself under stress paying somebody back, it may as well be yourself! (of course if you choose this option the above schedule is moot)

[Anonymous]

Tufa4311 wow! I am so grateful someone took that much time to look over my finances and help me make a plan!!! If i could, id give you a thousand kudos!!! THANK YOU!

I figure since ill be using the 1500 to pay all those to zero, i can take all my min payments to get that QS away from 90% utility asap, then tackle the others. It looks so much better and more manageable this way! Ill take one of my good checks and payoff one after this too! I am so excited! Cannot wait to pay this! And now im thinking i might not even have to take a loan from my 401k. Whoohoo! Thank you! I appreciate your help so much! Amazing what a difference having someone elses opinion makes. Dont know why i was so blind to getting those SIX accts to zero! Awesome!

[Revelate]

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@Anonymous wrote:
Tufa4311 wow! I am so grateful someone took that much time to look over my finances and help me make a plan!!! If i could, id give you a thousand kudos!!! THANK YOU!

I figure since ill be using the 1500 to pay all those to zero, i can take all my min payments to get that QS away from 90% utility asap, then tackle the others. It looks so much better and more manageable this way! Ill take one of my good checks and payoff one after this too! I am so excited! Cannot wait to pay this! And now im thinking i might not even have to take a loan from my 401k. Whoohoo! Thank you! I appreciate your help so much! Amazing what a difference having someone elses opinion makes. Dont know why i was so blind to getting those SIX accts to zero! Awesome!

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That's exactly what to do, snowball that debt!

To add what Tufa excellently said, I wouldn't take out money from my 401K for this that's my no touch, and for the moment emergency fund... if it were a traditional non-retirement savings account absolutely I'd say use it, but you're limited as to what you can contribute each year and you never get that time back.  From your description of income vs. debts you should be fine in short order.

Build the emergency fund / savings after you take care of the CC debt, it's always good to have a reserve and not live basically paycheck to paycheck but the potential loan from the 401K can do that now, and you'll get additional cash flow as those balances get paid down and with today's savings rates, you won't be losing much time on that front whereas saving now, and not paying the 20% APR credit cards off, losing like 19% interest right there... not good math .

[takeshi74]

I'd suggest getting the high utilization cards down first and then prioritizing based on APR.  You have nearly half of your cards well over the 30% maximum generally recommended.

If nothing else get the card at 95% down ASAP as it's maxed and a major red flag.

Utilization isn't just a significant scoring factor but a significant risk factor as well.  How long have these cards been at these levels of utilization?  Short term high utilization generally isn't an issue but prolonged high utilization can get you into trouble.

[tufa4311]

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@takeshi74 wrote:

I'd suggest getting the high utilization cards down first and then prioritizing based on APR.  You have nearly half of your cards well over the 30% maximum generally recommended.

If nothing else get the card at 95% down ASAP as it's maxed and a major red flag.

Utilization isn't just a significant scoring factor but a significant risk factor as well.  How long have these cards been at these levels of utilization?  Short term high utilization generally isn't an issue but prolonged high utilization can get you into trouble.

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While UTIL is both a significant scoring factor as well as a risk factor it also has no memory - if the OP will not be putting themselves in a position that requires a credit check as well as a good credit score this point is moot - yes, the 90% UTIL hurts her score and makes her a high risk but I'd suggest nuetralizing these negative affects based on these assumptions:

- pay off the high UTIL AFTER you pay the high APR's leads to: saving money, after all, the high UTIL has ZERO interest. That's the money part.

- pay off the high UTIL BEFORE you pay the high APR's leads to: perhaps being seen as a lower credit risk during a period where you have no need to worry about how your credit risk seems as you are not applying for anything and no one is looking at your credit standing and once the high UTIL is paid off the score jumps back up. That's the credit part.

I see and respect your point, but looking at the issue based on my two points above, I believe paying off with the high interest as the priority will best serve the OP.

[Anonymous]

I will pay those 6 to zero on payday (1500), then i think i will pay $100 immediately to my maxed out QS to get it under 90% (82%?). It has been that high for the past two weeks, and is the highest ive ever gone on the card. Usually stay under 700 at least. But now, having those first 6 to zero, will really help me pay the others down quicker. I spend so much every week just trying to pay down the store cards that I imagine having them payed off will free me up financially. I try to make 3 $100 payments each week, 100 to each card. But maybe now i can do more to take big chunks out of my debt. I really feel paying off as many as possible will motivate me. I believe ill see a score increase just from that alone! 

That walmart card really bothers me so i want to get that paid asap after this. I believe doing it as tufa suggests is the best thing for me, as having all those accounts paid to zero will motivate me. Plus, they are store cards that i will not run back up. I dont even carry them anymore. (Never used avenue until recently just because i wanted to show some usage after 6months of not using it so charged something small. I regret opening it now, especially because i lost a bunch of weight recently and no longer need it! And amazon is an old charge i payed down from a 400 balance with the 0%. Lowes i was recently approved for and used it to buy a new air conditioner, but immediately payed $150 to bring the balance to the $90).  And every dollar i save from not having to pay those 6accounts is more i can use to pay the latter ones. And i am not looking to apply for anything at this time.

My score just went up to 658 (Tu), and i havent felt the need to apply for anything. When my score first started going up, i would apply right away. I realize now, thats one major reason my score isnt higher. People dont get high scores by applying everytime their score rises. Now my thinking is more based on, taking care of my current ccc to attempt cli, and maybe down the road when my utilization is perfect (all zeros, one under 10%) i can apply for one or two cards that will earn me rewards based on my spending. I feel like it will be much easier to pif when i dont have these back balances from frivolous spending. 

i I truly appreciate both of you taking the time to read my longgg post and giving me your opinions. It seriously helps to talk it out with someone else. I feel like i have blinders on when it comes to my own money/debt. Thanks guys!

[sgs71]

Wow tufa! That was an awesome breakdown you did with this!  Very helpful!

[Anonymous]

whoa.......

tufa4311, would you mind taking a look at my credit profile and offering advice? Happy to PM or start a new thread.

Thanks in advance!!