Please help!

[Anonymous]

OK, I think I have finally figured out credit cards are not my friend. I am an over spender and love to shop for my 3 kids. Saying that, I have reevaluated my life and choices and realized that we need to get out of credit card debt and start living a better (debt free)life. Here is the question. What is the best way to become debt free? Credit cards - $24,300 - 13% $5000 - 14% $1500 - 18% $650 - 20% of bill $200- 21% $88 - 23% I know what to do with the little ones, but I wanted you to see the whole picture. Car Payment - $7000 at 8% We do live pay check to pay check, so I can only add $75 per paycheck over the min balances (for credit cards). Our savings is minimal and we would like to not touch our stocks/retirement/401K. Any suggestions?

[Anonymous]

foundthelight wrote:
OK, I think I have finally figured out credit cards are not my friend. I am an over spender and love to shop for my 3 kids. Saying that, I have reevaluated my life and choices and realized that we need to get out of credit card debt and start living a better (debt free)life. Here is the question. What is the best way to become debt free?

Credit cards -

$24,300 - 13%

$5000 - 14%

$1500 - 18%

$650 - 20% of bill

$200- 21%

$88 - 23%

I know what to do with the little ones, but I wanted you to see the whole picture. Car Payment - $7000 at 8% We do live pay check to pay check, so I can only add $75 per paycheck over the min balances (for credit cards). Our savings is minimal and we would like to not touch our stocks/retirement/401K. Any suggestions?

Are those percentages your interest rate or the amount of your payment?

Are those dollar amounts the balances or CL?

First thing you do is get rid of the CC. Don't close the accounts, but lock them away. If that don't work cut them up but 1 for emergencies.

I'd put extra payments to completely pay off the small ones right away and be done with them.

Then I'd start applying extra payments to the ones with the highest interest rate.

Cut out anything extra you don't "HAVE" to have and put the money you would have spent on it towards a CC.

As for the savings.......it is always nice to have money put back. However, how much interest are you earning on that money? Are you paying more interest on your balances then you are making on your savings? If so, you are losing money. If you put some of your savings to getting rid of the interest rate you are paying, you can use the money you would've paid to the CC to put back into savings. This is just my opinion. I wouldn't leave money in an account drawing 5% interest while paying 20% interest on a CC debt.

Message Edited by sidewinder on 04-24-2008 09:58 AM

[Anonymous]

Thanks for responding. The percentages are the interest rates, and the numbers is the amount to pay off.yikes!

[Anonymous]

Credit cards -

$24,300 - 13%

$5000 - 14%

$1500 - 18%

$650 - 20% of bill

$200- 21%

$88 - 23%

Well, at least your low balances are on your highest interest rates. Pay off the $88 and take the payment you would have paid and any extra you can and put it on the $200 along with your normal payment. Continue to do that until paid off.

Then take the payment you would have made on the $88 and the payment you would have made on the $200 and any extra you can and apply it to the $650 in addition to what you normally would have paid on the $650 until it is paid off.

Continue doing this up the chain.

When you get one paid off, don't think of the money you would have used for that payment as extra money. Use it to continue paying on your CCs.

Message Edited by sidewinder on 04-24-2008 10:07 AM

[Anonymous]

Thank you! Makes sense. I just need to keep motivated!

[Anonymous]

Thank you all for your help....here's the next question. When/if we get a bonus (around 10k) where do we apply this money?

[Anonymous]

I would say continue with small balances and work your way up. As the others suggested then you can take the payments that you normally would make on those cards and apply it to the others.

I would also like to add, if you know you are a spender... CUT ALL BUT ONE CARD UP. At least you will not go and charge them back up after you have paid them off.

[Anonymous]

---

@Anonymous wrote:
Thank you all for your help....here's the next question. When/if we get a bonus (around 10k) where do we apply this money?

---

The same thing!

Apply it to your highest interest rate debts first, because that will have the biggest impact. Then keep going on the plan outlined above.

Good luck.

Message Edited by meadmaker on 04-24-2008 05:17 PM

[Anonymous]

Thanks again! I have already cut up all but 1 card, and my husband has put that one away.

[shawnette]

Someone posted this link yesterday and it's very helpful:

http://www.whatsthecost.com/snowball.aspx?country=us