@iowe wrote:Thank you for your time drawing that gameplan up.
That's basically what I was considering. My objective is to get the hell out of the debt moreso than get into a mortgage, the mortgage is just my secondary objective. I'm just trying to accomplish this as smartly as I can with the options I have. With my relatively low income, I have to be debt free essentially to get approved and realistically afford a decent home and still be able to purchase essential things.
Just for the sake of knowing, say I opt not to get the Penfed loan and go at it all with snowballing from the ground up. Would you start with the lowest balance card first, or would you start by paying the auto loan off first and then go after the cards?
Until a few minutes ago, I would have said just go after the revolving accounts first, because paying off the installment loan probably won't help your scores but paying down revolving accounts would. But after reading @MarkintheHV 's post I think he has a very valid point: getting rid of the car loan makes the largest amount available monthly with which to tackle the others. So now I'm leaning towards @MarkintheHV 's advice.
@iowe wrote:
Installment loan (auto loan) : payoff $6610.01 - monthly payment $510.53 2.5% interest rate
Installment loan (student loans) : 29k - monthly payment is currently in forbearance not gaining interest
NFCU Cash Rewards apr 10.25% $ 20,841 / 24000 limit $421 min payment
Discover apr 18.25% $ 9756 / 18,000 limit $ 298 min payment
Snyc/Amazon Prime apr 22% $ 3634 / 6000 limit $118 min payment
Pentagon FCU apr 19% $ 3022 / 10000 limit $60 min payment
Capital One QS apr 22.90% $ 2932 / 4000 limit $87 min payment
Of those listed, your two highest revolving CL are also the best rates.. NFCU has no balance xfer fee..
Maybe you can get a CLI on the NFCU card for more consolidation space?
Perhaps also see if any card APR can be reduced.. Could be a couple hours on the phone can change the lay of the land.
If nothing productive on the phone, Cap1 to NFCU and the Disco has room for Sync and PenFed to start. Zeroing the 3 highest APR cards within your existing credit will simplify bookkeeping in any event and save some money moving forward.
Revolving debt total ~ 40k Monthly min payment total ~ $960
I have about an extra $600 per month to snowball with, on top of my minimum payments that I've been throwing at my lower balance cards. I've knocked out two of them so far.
Total debt including Installment & revolving ~ 70k
Only soft pulls but I checked my rates for a personal loans from two lenders to consolidate some revolvers.
Penfed preapproved for 11.25% on 20000
Discover Personal Loan prequalified for 18.99% on 30000
The penfed loan looks tempting, but if you can negotiate a CLI for NFCU and use that for consolidation it's better than either of the loans -- which you may or may not get approval for, and if so, may end up with different amounts or APR.
Any cashback or points you may have consider using against balances and lock/freeze as you see fit.
@SouthJamaica wrote:
@iowe wrote:Thank you for your time drawing that gameplan up.
Just for the sake of knowing, say I opt not to get the Penfed loan and go at it all with snowballing from the ground up. Would you start with the lowest balance card first, or would you start by paying the auto loan off first and then go after the cards?
Until a few minutes ago, I would have said just go after the revolving accounts first, because paying off the installment loan probably won't help your scores but paying down revolving accounts would. But after reading @MarkintheHV 's post I think he has a very valid point: getting rid of the car loan makes the largest amount available monthly with which to tackle the others. So now I'm leaning towards @MarkintheHV 's advice.
That doesn't make sense, though. Using the $600 extra/month to pay off the auto loan just means paying off the low interest auto loan first, while continuing to pay the interest on the balance of the high interest credit cards. You're not freeing up ~$500/month, you're spending an extra $600/month on a low interest rate loan while you could be paying off a high interest rate loan instead. Yes, after about 6 months the car will be paid off entirely and you can use that money for other things, but the same would be true if you paid off a high interest loan first. The only reason to pay off the auto loan first is psychological, not financial.
I would suggest if you have the will power to not charge up the cards use the avalanche method to attack the highest interest card first and then go from there. I am in agreement with the others who advise to let the auto loan ride itself out.
On another note, I have been through a divorce and was blessed to get custody of my daughter without a fight. I don't have the words to express how it makes me feel to see a father fight for a relationship with his daughter. When she gets of age to understand what you did and the time you have spent in her life it will build a bond that is unbreakable. Enjoy ever minute of the time you spend with her while she is young because they grow up so fast. My daughter is a junior in college and still lives with me and I wouldn't have it any other way!
Credit_Master
given the avalanche method, focusing on starting with the auto vs credit cards is rather trivial. its a math problem to determine the difference in cumulative interest. I suggested starting the auto first because OP mentioned modifying their insurance and freeing up another $80/mo.
the OP mentioned the possiblity of personal loan. refinancing high interest debt to much lower interest will save OP thousands of dollars over the long term.
at the end of 2018, with a blended interest rate of 18% I was at 30k revolving debt of 36k available. my score was in the low 700s with no derogatories. I acquired a personal loan at about 11% for 36 months. I spent 2019 making over the required payments on the loan. during those 12 months I was able to grow the credit limits on all my cards. in the beginning of 2020 I was able to take advantage of a 0% promo on one my cards and payoff the loan by moving the remaining balance. total interest and fees paid was about $2300 on paying off 30k! if I had gone with the avalanche/snowball method I easily would have paid 2-3x that in interest.
I took the "finances > fico" approach. in any case, paying thouands a month with no tangible return is a grind. what @Anonymalous said about a plan and frugality is critial.
I plan on leaving my coverage as is for the time being, unless for some reason I need to pinch a few dollars from other places and take the risk. I'm not sure how I would adjust my coverage in that event, but I'll stay mindful of your point there. Thanks!
I think I'm going to follow the strategy you laid out. If after paying off the Discover card 6-7 months from now and having the only things remaining being the Penfed Consolidation Loan and the NFCU Card, I will wait for another zero APR for 18 months offer from Discover since I occassionally get those, and then relieve that NFCU card of a large percentage of that balance. Then pay the Discover card off (well before the zero% APR period ends of course) again while continuing paying the new lower minimum on the NFCU card. I will repeat this process until the NFCU card is paid off.
Does this sound like a good plan?