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Advice Needed: Debt Repayment Plan

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Established Member

Advice Needed: Debt Repayment Plan

My husband and I are wanting to buy a house in the next 2-3 years and have decided to really take an active role in paying off debt that we've accrued over the years. I'm trying to figure out the best way to tackle this while also working to improve his "thin file": he is currently a co-applicant on our auto loan and also has a paid-off 10 year old auto loan on his record. Everything else is in my name alone. Below are the details:

 

My scores: TU 706/EX 715/EQ ? (should be similar) 1 TU inquiry that will fall off in September

His scores: TU ?/EX 728/EQ ? - 1 TU inquiry (same as mine)

No negative marks, 100% payments made on time, newest account is 20 months old, etc.

 

Balances:

Discover Card: $20,500 @ 16.99V% APR, 98% utilization, min payment $420

Visa FCU Card: $4,850 @ 6.90% APR, 97% utilization, min payment $120

Auto Loan: $7,065 @ 8.10% APR, 45 months remaining, $185/mo

 

I've already moved all bills, recurring charges, etc, off of the credit cards except for one minimal charge per month to keep them active. We just paid off our other vehicle this month, so I have an extra $500 per month to apply in addition to any windfall, bonuses, extras we receive. We have also moved to a cash allowance to reduce temptation of further spending on the cards.

 

My first thought was to go ahead and tackle the "monster" avalanche-style and pay down the Discover balance first. However, after reading a few similar threads on here, I'm now thinking of knocking down the Visa card to below 30% utilization - which should be achievable by the end of the year - and add my husband as a joint user to help build his account history. Once that has been accomplished, I would then shift focus to paying down the Discover card in hopes of eventually receiving a few decent BT offers. I would eventually like to add my husband as a joint user on the Discover card as well, but am also aware how that may play into the timeline with buying a home.

 

I'm not really worried about the auto loan.

 

So what are your thoughts on this repayment plan: any improvements, changes, or other ideas I should consider? Am I going to be setting myself up for balance chasing with Discover as I pay it down?

 

Any advice is appreciated. Smiley Happy

Message 1 of 17
16 REPLIES 16
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Super Contributor

Re: Advice Needed: Debt Repayment Plan

If you pace yourself, Discover should be fine.

 

Get both credit cards under 88.9% utilization FIRST.

 

Then get both cards under 68.9%.

 

Then get both cards under 48.9%.

 

Then work on which ever one you want to.

 

2-3 years is plenty of time. 

 

Good luck!


07/31/20 Mortgage scores: EX2 720, EQ5 696, TU4 no idea.
08/01/20 Fico 8: EX 709, EQ 713, TU 733.
08/05/20 Fico 9: EX 701, EQ 711, TU no idea...

Zero percent financing is where the devil lives...
Sitting in the garden behaving myself. #noinqs2020
Message 2 of 17
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Valued Contributor

Re: Advice Needed: Debt Repayment Plan


@tcbofade wrote:

Get both credit cards under 88.9% utilization FIRST.

Then get both cards under 68.9%.

Then get both cards under 48.9%.

I would attack the high interest card after both are under 48.9%.

He should get a couple of cards of his own, skip the AU

FNBO 2% Cashback Visa (20k) / Bank of the West Cashback MC (20k) / US-Bank Cash+ (15k)
FNBO Travel Elite (15k) / Citi Double Cash (20k) / US Alliance 3% (20k)
Ficos : 830 / AAoA : 9 yrs / AoOA : 24 Yrs / AoYA : 0
Message 3 of 17
Highlighted
Contributor

Re: Advice Needed: Debt Repayment Plan

but how much can you pay monthly total towards the credit cards?

 

excel tells us that for about ~$1200/mo you can pay both down in 2 years. if ~2% in minimum payments on ~25000 is 500 and you mention an "extra 500" a month available you're almost there.

 ratenperpv=pmt=cumipmt
discover16.992420500−1013−3823
visa fcu6.9244850−217−356
discover16.993620500−731−5808
visa fcu6.9364850−150−533

 

if that is possible just pay the calculated monthly amounts, in 2-3 months you will be under 88% on both versus ballooning one then the other, etc.

 

additionally, as someone else said, if he can get a couple of his own with balance transfer offers try that to save some interest dollars.

Garden Club Spadechasediscovercitibofanfcu
LIMIT890020000179003000029000
1/2020460019500164003000025000
7/201923001950064002000016800
1/20192300135006400125006800
7/201823001200039006500-
Message 4 of 17
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Established Member

Re: Advice Needed: Debt Repayment Plan

We're paying around $1200/mo total (including the additional $500).

 

Interest on the Discover is split per balances due to previous APR reductions & variable interest rates. I gave a rough rounded estimate. Currently it sits at the following:

 

$9,000 @ 14.24%

$7,700 @ 16.24%

$3,800 @ 18.24%

 

I've also updated the OP with minimum monthly payments.

Message 5 of 17
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Established Contributor

Re: Advice Needed: Debt Repayment Plan

agreed with this

Get both credit cards under 88.9% utilization FIRST.

 

also - he should open 2 cards - forget about adding him as an AU

you have very high individual utilization AND very high overall utilization - you need some breathing room

start by using the extra $500 to get both into a more 'lender friendly' zone

 

that discover interest alone is $290/mnth which is crushing you

 

also - cut out any and all 'extras' for as long as possible - TV subscriptions - cut your cell bills if possible - look everywhere to cut costs

 

make even $5 payments on the cards if you have extra 

 

it will all add up and you will get through this

 

good luck

July 31/2019. EX-712. EQ-704. TU-726
Dec 16/2019. EX. 721. EQ. 723. TU 746
May 17/2020 EX. 733 EQ. 729 TU 753
July 5/2020 EX. 726 EQ. 720 TU 745
Inq. EX 7 EQ 3 TU 2
CC 5x24, 1x12


Cards
Amex BCP $20k
Apple GS $15k
BMW/Elan $2.5k
Cap1 QS $16.7k
Chase Amazon $13.6k
Chase United Club Infinite $20k
Citi DC $13.5k
CreditUnion1 $9k
DiscoverIT $20.5k
HSBC Gold - $10.5k
Wells Sig Visa $12k
Message 6 of 17
Highlighted
Contributor

Re: Advice Needed: Debt Repayment Plan

the blended rate is 15.73%, does not change the math much.


keep motivated!


I'm 18 months into paying off ~34000 with 14000 to go. it is a real grind sometimes Smiley Frustrated but I should be done in another 10 months. technically I could pay it off in Jul 2020 if I exhaust my emergency fund. the good thing is in Feb/Mar 2020 I got it all packed into one account/payment with a 0%/12mo promo balance transfer to NFCU.

Garden Club Spadechasediscovercitibofanfcu
LIMIT890020000179003000029000
1/2020460019500164003000025000
7/201923001950064002000016800
1/20192300135006400125006800
7/201823001200039006500-
Message 7 of 17
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Established Member

Re: Advice Needed: Debt Repayment Plan

@SlideOrInsert Way to go! That's inspiring.

 

We're in the same boat: I could take a big chunk out of this by using our emergency savings or long-term savings, but I would rather not do that. We've already trimmed the fat from our monthly expenses and are trying to focus on not only eliminating debt, but also making sure our HSA, 401K, and IRAs are not forgotten. Finding the balance between it all is tough.

Message 8 of 17
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Established Contributor

Re: Advice Needed: Debt Repayment Plan


@SlideOrInsert wrote:

the blended rate is 15.73%, does not change the math much.


keep motivated!

+1, lots of us here are in or have been in the same boat. I'm three years into paying off $80k, should be finished in February. The interest can be a killer, reducing that was a big key for me. When I started, I had $2k/mo min payments with $950 in interest. A combination of low interest loans (6-7%) and balance transfers quickly got that down around $350, which is now about $70/mo in interest on $18k balance. I know some posters recommend against serial balance transfers (repeated refinancing BTs when the promo rate ends), but it has worked for me, and I should be on the final round at this point.

 

Note that there have been reports that some lenders are reducing BT offers so they might be harder to find than they were a few months ago.

Scores: Jun 20: EX FICO8 823, TU FICO8 813, EQ FICO8 820
AoOA: closed: 36 years, open: 25 years; AAoA: 11.8 years
Amex Gold, Amex Green, Amex Blue, Amex ED, Amex Delta Gold, Amex Hilton Surpass, BoA Platinum Plus, Chase Slate, Chase Amazon, Chase CSP, Citi AA Plat, Sync Lowes, Sync JC Penney - total CL 145k
Loans: Prosper (20k/3yrs 7.14%), Lending Club (10k/3yrs 5.89%), Chase car loan (35k/6yrs 0.9%)
Message 9 of 17
Highlighted
Established Contributor

Re: Advice Needed: Debt Repayment Plan

good work on cutting costs

 

i would look at stopping the HSA and IRA short term

if you get a match on the 401k, that is a 50% return, so keep that going

 

but the HSA and IRA arent making you 16.99%, so the debt reduction is a better priority in my opinion

 

 

 

July 31/2019. EX-712. EQ-704. TU-726
Dec 16/2019. EX. 721. EQ. 723. TU 746
May 17/2020 EX. 733 EQ. 729 TU 753
July 5/2020 EX. 726 EQ. 720 TU 745
Inq. EX 7 EQ 3 TU 2
CC 5x24, 1x12


Cards
Amex BCP $20k
Apple GS $15k
BMW/Elan $2.5k
Cap1 QS $16.7k
Chase Amazon $13.6k
Chase United Club Infinite $20k
Citi DC $13.5k
CreditUnion1 $9k
DiscoverIT $20.5k
HSBC Gold - $10.5k
Wells Sig Visa $12k
Message 10 of 17
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