Options/on paying down $79k on CC debt!

[larinoriani]

Long story, but here's the short version.

In 2010, my partner got laid off from his retail management job. At that point he talked to me about his desire to go back to school and persue a nursing carrier.

>>>>>>Fast forward to 2014, he graduates with his Master in Science of nursing able work as RN (Registered nurse), but we decide to go all the way and immediately get into the Doctorate of Nursing Practice (DNP) program. DNP is a VERY hard 2.5 year program in which you are not able to work.

>>>>>>Fast forward to May 2017, he graduates as a Doctor in Nursing Practice and passes boards to practice as a Family Nurse practitioner. Gets job as a FNP in a private practice and we start trying to plan for repayment.

As a result of the previous 7 years of living out of one income, student loans and credit cards, we are left with the following debt:

-Over 200k of student loans.

-Over 80K of credit card debt.

-2 personal loans (2013 and 2016) currently around 30k balance, maturity on 2020 and 2021.

Yes, it's a lot of debt.

Now the great part is that, through all these years, not sure how! we managed to stay afloat and current on EVERYTHING, which has helped us to mantain good credit scores and flawless payment history.

The bad part, is that it would take us 25+ years to pay this credit card balances if we don't come up with a strategy RIGHT NOW. In 2017 ALONE, we paid over $15k in INTEREST ONLY. It's just too depressing seeing this amount of money go to the trash.

Anyway,   I'm doing my due diligence to see what the best approach is, taking in account any options, from snowball, HELOC, Credit Consolidation, all the way to bankruptcy.

Disclusures:

-Combined NET monthy income: $9.1k

-Monthly expenses: $7.9k

-Combined CC debt chart below.

-Moved to cash-only bases starting 08/2017.

-FICO scores are ~707 with no lates in 16 years of history for me and ~640 with one 30 day late payment in 2012 for him.

Any advice, suggestions an options are greatly appreciated!

NAME	LIMIT	BALANCE 12/2017	BALANCE 7/2017	INT PAID IN 2017	INT. RATE
TJ Maxx	$900.00	$698.12	$750.00	$204.41	27.99
Lowe's	$4,600.00	$902.65	$944.00	$245.72	24.99
JC Penny	$1,200.00	$1,308.38	$1,087.00		26.99
Amex Delta 1	$2,000.00	$1,714.76	$1,542.00	$394.09	20.24
Chase Amazon VISA	$2,000.00	$1,661.72	$1,836.00	$395.50	23.24
Chase SLATE	$2,300.00	$1,911.85	$2,047.13	$382.20	19.24
Amex Delta 2	$2,000.00	$1,960.81	$2,065.00	$444.74	20.24
Barclays	$3,200.00	$2,504.58	$2,630.00	$647.32	23.99
Discover Card	$3,100.00	$2,631.05	$2,722.69	$576.54	20.99
BOFA 1	$3,000.00	$2,684.00	$2,804.00	$499.38	18.99
Sears	$3,550.00	$3,107.84	$3,253.00	$874.74	26.24
1st Ntnl Bank of Omaha	$4,050.00	$3,467.09	$3,621.00	$724.66	18.99
Macys	$10,000.00	$3,618.01	$3,761.00	$726.90	25.5
Citi Thank you	$5,300.00	$4,791.00	$4,977.00	$851.65	21.24
BOFA 2	$12,200.00	$11,603.00	$11,085.00	$1,676.77	15
CITI Diamond	$18,000.00	$16,418.00	$17,120.00	$3,139.00	19.5
AMEX Blue Cash	$18,900.00	$18,033.00	$19,004.00	$3,248.00	18.24
Totals	$101,350.00	$79,015.86	$81,307.52	$15,031.62

Thanks in advance!

[Kree]

You mention income. You mention debt. But you did not mention expenses.

Of that 156k how much do you have to make payments?  Plenty of 2 people families live off of 50k a year.  Can you throw 50-60k at the debt for a few years by living in a cheap apartment?  Will be paid of very quickly then.

[Anonymous]

1. Sell all your household assets and downsize into a 1 bedroom rental for the entire financial reboot process.
2. Call ALL your revolving creditors monthly to ask for an APR reduction, either temporary or permanent.  If they say no this month, call them next month and repeat until they're all lower.  If they do reduce you, try again in 6-12 months.
3. If you own fancy cars with positive equity, sell those and downsize to driving beaters with a good quality drivetrain.
4. Cut the cord on cable, Netflix, HULU, $100+ phone bill subscriptions and $1000 smartphones.
5. Bagged lunches and dinners at home.
6. 10% of your net income into emergency savings before anything else.
7. Cut travel/vacation expenses completely during the reboot.
8. Pay the rest of your income towards the "highest APR" method and stop increasing balances.  Only use credit cards for rewards/cashback, but never increase your balance month-to-month.

After all is said and done, you can pay your debt to $0 in about 3-3.5 years, if not sooner.  And you'll end up with probably $20,000 in emergency savings!

Depending on your ages, this can either be easy to do or very difficult, but paying that much in interest means whatever else you're buying/spending on is automatically 20-40% more expensive once you calculate the interest over time.

[larinoriani]

Updated the disclosures with expenses info.

Currently mortgage payment is $625.00, cheaper than any cheap apartment! lol

Currently $2.300.00 a month are going to CC payments.

[jlitnns]

---

@Kree wrote:

You mention income. You mention debt. But you did not mention expenses.

Of that 156k how much do you have to make payments?  Plenty of 2 people families live off of 50k a year.  Can you throw 50-60k at the debt for a few years by living in a cheap apartment?  Will be paid of very quickly then.

---

Yep, I'd like to know a litte more on payments and expenses. Especially the student loans because that may eat up a chunk of what you could put toward the snowball method of paying down the cc's.

Back to the OP: You should pretty easily be able to maintain minimum payments and payoff the smaller ones and as you do that you will be able to apply what you were paying to those on towards the larger balances and should be able to knock that out quickly. 

And as said by ABCD, get rid of luxury expenses, there is no reason to have cable/sat TV or any reocurring subscriptions, you can sacrifice for a year or two. Ditch car payments and don't eat out. Remember, these are temporary sacrifices.

We are a family of 5, about to be 6 in March and live off of $42k yr right now. Took a significant paycut to start a business. But we don't have a problem paying our bills, we just don't have much left over to save at this point. 

[larinoriani]

---

@jlitnns wrote:

---

@Kree wrote:

You mention income. You mention debt. But you did not mention expenses.

Of that 156k how much do you have to make payments?  Plenty of 2 people families live off of 50k a year.  Can you throw 50-60k at the debt for a few years by living in a cheap apartment?  Will be paid of very quickly then.

---

Yep, I'd like to know a litte more on payments and expenses. Especially the student loans because that may eat up a chunk of what you could put toward the snowball method of paying down the cc's.

Back to the OP: You should pretty easily be able to maintain minimum payments and payoff the smaller ones and as you do that you will be able to apply what you were paying to those on towards the larger balances and should be able to knock that out quickly. 

---

-Combined NET monthy income: $9.1k

-Monthly expenses: $7.9k

Student loans are in forebearence, consolidation in process, don't have payment amount at this point.

[Anonymous]

$625 mortgage sounds great!  But... (there's always a but with me)

What's the overall household expenditure?

I've mentored a few families in recent years who were shocked that their mortgage was only 20% of their overall household expenses, and it made more sense financially for them to rent out their home and move into a rental themselves.  Yes, it sounds crazy, but when you've got a massive amount of debt facing you, you want to look at every option possible to eek out more cash to put towards debt.

More important than reducing interest is planning for future difficulties and having a strong emergency savings account.  Even if it costs you $2000 more in interes to put $20,000 away over 3 years, if either of you lose a job or face some life emergency, that $20,000 will cover your minimum payments until the emergency is over.  Keep that in mind.

I'd say you want to do my reverse budget plan first -- especially if you have interest-accruing debt from TJ Maxx or JC Penney, which typically aren't places one goes to shop for things they absolutely need to live on.  Do the reverse budget for 12 months, add up the numbers, and then see what you see.  In many cases of consumer debt from "living on credit cards" while going to school, most people in my experience have 80% unnecessary spend when they do their reverse budget.  If this is the case, stop that spending going forward and attack your debt hardcore.  I recently reviewed a recent master's degree graduate who accrued over $70,000 in debt over 3 years and she had spent $34 per day on dining out and $18 per day in Uber charges in that debt -- $56,000 of her debt (81%!) was on dining out and not taking the bus!

You also mention your student loans are in forebearance -- I'm not familiar with the process, but does interest continue to acrue in forebearance?  If so, you'll end up with a much higher debt due once the payments start being required.  So I'd include that debt into your paydown at the interest rate provided.

[SouthJamaica]

---

@larinoriani wrote:

Long story, but here's the short version.

In 2010, my partner got laid off from his retail management job. At that point he talked to me about his desire to go back to school and persue a nursing carrier.

>>>>>>Fast forward to 2014, he graduates with his Master in Science of nursing able work as RN (Registered nurse), but we decide to go all the way and immediately get into the Doctorate of Nursing Practice (DNP) program. DNP is a VERY hard 2.5 year program in which you are not able to work.

>>>>>>Fast forward to May 2017, he graduates as a Doctor in Nursing Practice and passes boards to practice as a Family Nurse practitioner. Gets job as a FNP in a private practice and we start trying to plan for repayment.

As a result of the previous 7 years of living out of one income, student loans and credit cards, we are left with the following debt:

-Over 200k of student loans.

-Over 80K of credit card debt.

-2 personal loans (2013 and 2016) currently around 30k balance, maturity on 2020 and 2021.

Yes, it's a lot of debt.

Now the great part is that, through all these years, not sure how! we managed to stay afloat and current on EVERYTHING, which has helped us to mantain good credit scores and flawless payment history.

The bad part, is that it would take us 25+ years to pay this credit card balances if we don't come up with a strategy RIGHT NOW. In 2017 ALONE, we paid over $15k in INTEREST ONLY. It's just too depressing seeing this amount of money go to the trash.

Anyway,   I'm doing my due diligence to see what the best approach is, taking in account any options, from snowball, HELOC, Credit Consolidation, all the way to bankruptcy.

Disclusures:

-Combined NET monthy income: $9.1k

-Monthly expenses: $7.9k

-Combined CC debt chart below.

-Moved to cash-only bases starting 08/2017.

-FICO scores are ~707 with no lates in 16 years of history for me and ~640 with one 30 day late payment in 2012 for him.

Any advice, suggestions an options are greatly appreciated!

NAME	LIMIT	BALANCE 12/2017	BALANCE 7/2017	INT PAID IN 2017	INT. RATE
TJ Maxx	$900.00	$698.12	$750.00	$204.41	27.99
Lowe's	$4,600.00	$902.65	$944.00	$245.72	24.99
JC Penny	$1,200.00	$1,308.38	$1,087.00		26.99
Amex Delta 1	$2,000.00	$1,714.76	$1,542.00	$394.09	20.24
Chase Amazon VISA	$2,000.00	$1,661.72	$1,836.00	$395.50	23.24
Chase SLATE	$2,300.00	$1,911.85	$2,047.13	$382.20	19.24
Amex Delta 2	$2,000.00	$1,960.81	$2,065.00	$444.74	20.24
Barclays	$3,200.00	$2,504.58	$2,630.00	$647.32	23.99
Discover Card	$3,100.00	$2,631.05	$2,722.69	$576.54	20.99
BOFA 1	$3,000.00	$2,684.00	$2,804.00	$499.38	18.99
Sears	$3,550.00	$3,107.84	$3,253.00	$874.74	26.24
1st Ntnl Bank of Omaha	$4,050.00	$3,467.09	$3,621.00	$724.66	18.99
Macys	$10,000.00	$3,618.01	$3,761.00	$726.90	25.5
Citi Thank you	$5,300.00	$4,791.00	$4,977.00	$851.65	21.24
BOFA 2	$12,200.00	$11,603.00	$11,085.00	$1,676.77	15
CITI Diamond	$18,000.00	$16,418.00	$17,120.00	$3,139.00	19.5
AMEX Blue Cash	$18,900.00	$18,033.00	$19,004.00	$3,248.00	18.24
Totals	$101,350.00	$79,015.86	$81,307.52	$15,031.62

Thanks in advance!

---

I'm a fan of the 'snowball' method. Pay off the lowest balance first, then the next lowest, and so on.

The brilliance of it is that each time you pay one off, you lose that monthly payment which means you can apply that money to the next one one the list.

[jlitnns]

---

@SouthJamaica wrote:

---

@larinoriani wrote:

Long story, but here's the short version.

In 2010, my partner got laid off from his retail management job. At that point he talked to me about his desire to go back to school and persue a nursing carrier.

>>>>>>Fast forward to 2014, he graduates with his Master in Science of nursing able work as RN (Registered nurse), but we decide to go all the way and immediately get into the Doctorate of Nursing Practice (DNP) program. DNP is a VERY hard 2.5 year program in which you are not able to work.

>>>>>>Fast forward to May 2017, he graduates as a Doctor in Nursing Practice and passes boards to practice as a Family Nurse practitioner. Gets job as a FNP in a private practice and we start trying to plan for repayment.

As a result of the previous 7 years of living out of one income, student loans and credit cards, we are left with the following debt:

-Over 200k of student loans.

-Over 80K of credit card debt.

-2 personal loans (2013 and 2016) currently around 30k balance, maturity on 2020 and 2021.

Yes, it's a lot of debt.

Now the great part is that, through all these years, not sure how! we managed to stay afloat and current on EVERYTHING, which has helped us to mantain good credit scores and flawless payment history.

The bad part, is that it would take us 25+ years to pay this credit card balances if we don't come up with a strategy RIGHT NOW. In 2017 ALONE, we paid over $15k in INTEREST ONLY. It's just too depressing seeing this amount of money go to the trash.

Anyway,   I'm doing my due diligence to see what the best approach is, taking in account any options, from snowball, HELOC, Credit Consolidation, all the way to bankruptcy.

Disclusures:

-Combined NET monthy income: $9.1k

-Monthly expenses: $7.9k

-Combined CC debt chart below.

-Moved to cash-only bases starting 08/2017.

-FICO scores are ~707 with no lates in 16 years of history for me and ~640 with one 30 day late payment in 2012 for him.

Any advice, suggestions an options are greatly appreciated!

NAME	LIMIT	BALANCE 12/2017	BALANCE 7/2017	INT PAID IN 2017	INT. RATE
TJ Maxx	$900.00	$698.12	$750.00	$204.41	27.99
Lowe's	$4,600.00	$902.65	$944.00	$245.72	24.99
JC Penny	$1,200.00	$1,308.38	$1,087.00		26.99
Amex Delta 1	$2,000.00	$1,714.76	$1,542.00	$394.09	20.24
Chase Amazon VISA	$2,000.00	$1,661.72	$1,836.00	$395.50	23.24
Chase SLATE	$2,300.00	$1,911.85	$2,047.13	$382.20	19.24
Amex Delta 2	$2,000.00	$1,960.81	$2,065.00	$444.74	20.24
Barclays	$3,200.00	$2,504.58	$2,630.00	$647.32	23.99
Discover Card	$3,100.00	$2,631.05	$2,722.69	$576.54	20.99
BOFA 1	$3,000.00	$2,684.00	$2,804.00	$499.38	18.99
Sears	$3,550.00	$3,107.84	$3,253.00	$874.74	26.24
1st Ntnl Bank of Omaha	$4,050.00	$3,467.09	$3,621.00	$724.66	18.99
Macys	$10,000.00	$3,618.01	$3,761.00	$726.90	25.5
Citi Thank you	$5,300.00	$4,791.00	$4,977.00	$851.65	21.24
BOFA 2	$12,200.00	$11,603.00	$11,085.00	$1,676.77	15
CITI Diamond	$18,000.00	$16,418.00	$17,120.00	$3,139.00	19.5
AMEX Blue Cash	$18,900.00	$18,033.00	$19,004.00	$3,248.00	18.24
Totals	$101,350.00	$79,015.86	$81,307.52	$15,031.62

Thanks in advance!

---

I'm a fan of the 'snowball' method. Pay off the lowest balance first, then the next lowest, and so on.

The brilliance of it is that each time you pay one off, you lose that monthly payment which means you can apply that money to the next one one the list.

---

This^^^

[Anonymous]

What makes up the $7900 in monthly expenses if the mortgage is $625, the student loans are in forebearance, and you've only got $110k in unsecured debt?

I can't shake the notion that something is bleeding money big time that isn't listed here.