In need of Advice

[Anonymous]

Guy's I need some helpful advice I am getting married and I have about 12k in credit card debts. what approach should I use to trim down all my debt before we proceed with planning our wedding. My finance has eliminated all of her debts and now we are to trim down my 12k.... any suggestions? Frank

[Tuscani]

Welcome. Can we get more info? 12k across how many cards? Interest rates? Your FICOs?

Thanks!

[Anonymous]

I'm in the latter stages of my debt elimination process.   I bought  Dave Ramsey's Total Money Makeover.   It's awesome, it works.   The method I used on his was the Snowball effect.  That is you round up all your Credit cards.   Start with the one that has the lowest balance due.    Figure out how much more a month you throw on that card( above the min. payment due)  all the while still paying at least the min on each of your other cards.   Once you have that card paid off,  take the amount you have been using on the paid off card and apply it to the amount you are using on the next card and so, forth and so forth. 

[Anonymous]

for example  you have three cards.   You pay $200 a month for min. payment. on each.  You can start to pay an extra $200 a month.   So on card one you start paying $400 a month, while still paying $200 each on month on card 2 and card three. 

Now once card one is paid off, you then take the $400 a month you have been paying on card one and apply it to card 2, now paying $600 a month until it's paid off.   Once card two is paid off you then take the $600 from card 2 and apply to card three and then you start paying $800 a month.

I like it because for one, you see results quicker by paying off the lower balance first and that is usually a good motivation to keep it up once you see results.  and two, by the time you get to your higher balance you'll have a good sized "snowball built up that you can make more of a dent into the size of the debt.

It's a great book, he does have some funky philophy's about living without credit and such but for getting out of debt.  He is spot on

I think Dave Ramsey should start cutting me some checks for how much I plugg his book.

[Anonymous]

I'm not a Dave Ramsey fan per se, but I'm in favor of whatever you can do to get out of debt as fast as possible -- without robbing a convenience store or gas station, LOL.

How did your fiancee get out of debt? Maybe she can give you some tips.  It would be a good lead in for those discussions you MUST have before you get married:

How are you going to organize your finances?  Who will pay the bills and balance the checkbook?  How will you make investment decisions?  Are you alike or different when it comes to spending, saving, risk tolerance, etc? What are your views on kids -- should you pay to put them in private schools? Save for their college educations or let them get loans and fend for themselves?  Who is going to stay home and look after them when they are young? How much will you give to charities?

Blah, blah, blah.  All important stuff to discuss.

And most importantly ... how will you each keep from falling in the debt trap again?

[Anonymous]

Ok I'll get scores and balances updated soon... The honey hardly spends any money, and uses her credit cards only when in need of emergencies or when she wants to something special... I on the other hand like to shop a lot so it explains why I am down 12k... I have put the credit cards away and I don't plan on making any major purchases any time soon... We will like to boost my credit score's before we look into a mortgage (Scores and balances are coming soon)... We have had all the talks about marriage even before we got engaged and we plan to be married about 3 years + before kids come in the picture... I will like for us to travel and enjoy each others company before we have little one's... thanks all for the responses

[Anonymous]

Frank85,

Here are my CC Payoff Tactics.
http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&message.id=4120&query.id=1998

[Anonymous]

I guess one way to look at why paying off a collection doesn't boost your score would be to use the analogy of  why student's don't get rewarded for doing well in Summer School.   You/we put ourselves in that bad spot.

You also have to look beyond of what's best for boosting your FICO SCORE  and that is getting that debt out of your life and being able to move on.    Once a debt is in collection, it's just the worst in can be, the phone calls, the mailings, the dings on the CR, no one looking to give you credit, the looming possiblilty of them suing for Judgment.    If you have the means, pay it. AND ALL THAT STOPS.   There's more to life than just the FICO score and that's the financial responbility and mental welfare you should have to yourself and your family.   So if you have the means to pay it ,  pay it.  If you don't work something out.  The sooner it's out of your life the sooner you can start getting on with yours.  

[Anonymous]

Boswd,

I didn't see anything in any of the posts on this thread that mentioned a collection.