What to do about being $45K in debt!

[OMIAHEART]

Hi all,

I've been a member of myficofor some time and occaisionly read through the forums.  I want to buy a house in the next two years but don't know if i'll ever be able to get out of debt.  I make a decent salary of $81K a year but have the following debts...

Toyota Financial $26,500

MBNA Loan $27,000

B of A $8400

Chase $2600

Chase $3800

Merrick $4200

I know i need to bring the balances down but have no idea where to start.  My credit report is clean no lates, baddies, judgements, etc.  My current fico scores are 630/647/659.  A few years back I was in the 720's but have slipped by more than 100 points.

I wanted to know if i should use some remaining credit on my MBNA line of credit ($35K) to pay off some of my credit card bills or if i should just try to pay them off one card at a time.  I have other credit cards that are open but i don't use.

I currently pay over $1600/month to all of the above (as a minimum) payment.  Where do i start; and what should I do to get rid of them?

[Anonymous]

List the APR's and CL's for us.

Also the $ you can contribute towards debt-

[Anonymous]

You are definitely going to have to get the UTL down on the CC's...for a home loan..they are going to tell you..you DTI ratio is TOO high...but if you pay down the CC's...and reduce the balances...you scores will go up..and you min payments will be lower..you have two years..and you aren't really in a lot of debt...you owe this..but it's not like you are behind..and can't afford it...about to lose everything...Timothy asked for you APR..and CL...to tell you which CC's to pay down first and how to do it...

[OMIAHEART]

Timothy-

Here you go...

Toyota Financial $26,500 (6.9%)

MBNA Loan $27,000 (13.99%) credit limit 35K

B of A $8400 (19.9%) credit limit $8700

Chase $2600 (0%) Credit limit $2800

Chase $3800 (18.99%) Credit limit $5k

Merrick $4200(18.99%) Credit limit $5K

[Anonymous]

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@OMIAHEART wrote:

Timothy-

Here you go...

Toyota Financial $26,500 (6.9%)

MBNA Loan $27,000 (13.99%) credit limit 35K

B of A $8400 (19.9%) credit limit $8700

Chase $2600 (0%) Credit limit $2800

Chase $3800 (18.99%) Credit limit $5k

Merrick $4200(18.99%) Credit limit $5K

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First, you need to know (if you don't already) that minimum payments are NOT designed for you to pay off your cards. They are designed to keep you in debt and for the creditor to continue to draw interest and make more money off of you.

That being said, you need to maximize your payments ASAP. If you can double or triple what you are paying a month, it will be paid off exponentially sooner.

What I would do, and this is just me, is check around your cards to see what kind of good, "good" being the operative word, balance transfer offers you can get. The idea is to get your debt to cost you the least amount possible. At that point, evaluate again what kind of interest rates you have and start with the cards that are costing you the most, i.e. the card with the highest rate. Right now, that's your BoA card. So make minimum payments on everything else and maximize your payment to BoA. Then move to Chase, Merrick, MBNA, and finally the Chase at 0%.

Notice that I skipped right over the Toyota account. I'm assuming that's a car loan and I wouldn't touch it until after credit card debt is paid. Mostly b/c I hate owing money to CC's and chances are that Chase account at 0% will hit you with more than 6.9% after that offer is up.

[Anonymous]

First thing you need to do is sell that car and get a paid in cash beater until you're out of debt. Use this extra $500-$600/month to pay off the smallest to largest cards one by one. Build a written budget and cut expenses. Throw every extra dollar at the debt.

[Anonymous]

How much extra can you contribute?

With that extra money, I say start to tackle Merrick and Chase first since they are closest to the limit. Or you can start with the one that has the highest interest rate.