Advice on Large Payment Toward Debt

[whitewolf361]

So, I have quite a bit of debt that I've accumulated over the past 2 years, and I have the means right now to make a large payment towards that. With the increase in interest, my payments don't seem to making as much of a difference lately, so I need some advice on how to best pay my balances that can save me the most money per month, so I can knock out the remaining balances quicker. I want to use $7000 to pay towards my balances (/limit), here are my cards, balances, and APRs:

• Old Navy: $1310/3000 - min pay $40.55 - 28.99%
• American Eagle: $1767/1800 - min pay $60 - 28.24%
• Ulta: $516/3000 - min pay $38 - 28.24%
• DCU Visa: 437/2000 - min pay $25 or $35 - 17.5%
• Quicksilver Visa: $2557/3250 - min pay $74 - 22.24%
• Quicksilver MC: $1535/2500 - min oay $51 - 27.74%
• Discover Chrome: $1807/2000 - min pay $56 - 25.24%
• Wells Fargo Cashwise: $7017/8000 - min oay $214 - 26.49%
• Amazon Prime Visa: $876/1500 - min pay $45 - 25.24%

I was doing so well with cards, nearly had balances paid off in 2020, then had my hours cut to part time for a while. Then I got a new job and didn't have appropriate clothing, and had ended up spending way too much after that point. I just need a way to get my monthly payments down so I can pay the rest of these much easier/quicker. I have $7000 to put towards this. Any payment plan advice would be welcome.

[GZG]

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@whitewolf361 wrote:

So, I have quite a bit of debt that I've accumulated over the past 2 years, and I have the means right now to make a large payment towards that. With the increase in interest, my payments don't seem to making as much of a difference lately, so I need some advice on how to best pay my balances that can save me the most money per month, so I can knock out the remaining balances quicker. I want to use $7000 to pay towards my balances (/limit), here are my cards, balances, and APRs:

• Old Navy: $1310/3000 - min pay $40.55 - 28.99%
• American Eagle: $1767/1800 - min pay $60 - 28.24%
• Ulta: $516/3000 - min pay $38 - 28.24%
• DCU Visa: 437/2000 - min pay $25 or $35 - 17.5%
• Quicksilver Visa: $2557/3250 - min pay $74 - 22.24%
• Quicksilver MC: $1535/2500 - min oay $51 - 27.74%
• Discover Chrome: $1807/2000 - min pay $56 - 25.24%
• Wells Fargo Cashwise: $7017/8000 - min oay $214 - 26.49%
• Amazon Prime Visa: $876/1500 - min pay $45 - 25.24%

I was doing so well with cards, nearly had balances paid off in 2020, then had my hours cut to part time for a while. Then I got a new job and didn't have appropriate clothing, and had ended up spending way too much after that point. I just need a way to get my monthly payments down so I can pay the rest of these much easier/quicker. I have $7000 to put towards this. Any payment plan advice would be welcome.

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• Old Navy: $1310/3000 - min pay $40.55 - 28.99%     
• American Eagle: $1767/1800 - min pay $60 - 28.24%   
• Ulta: $516/3000 - min pay $38 - 28.24%    
• Quicksilver MC: $1535/2500 - min oay $51 - 27.74%   
• Wells Fargo Cashwise: $7017/8000 - min oay $214 - 26.49%  
• Discover Chrome: $1807/2000 - min pay $56 - 25.24%
• Amazon Prime Visa: $876/1500 - min pay $45 - 25.24%
• Quicksilver Visa: $2557/3250 - min pay $74 - 22.24%
• DCU Visa: 437/2000 - min pay $25 or $35 - 17.5%

Minimum payments on everything and then go top down with every single dollar you can. 

[NoMoreE46]

Hey there @whitewolf361.

Glad that you have a big chunk of money to pay your balances down.

Hopefully you'll get a lot of suggestions on how to go about this.  

One method is that you pay off the highest interest rate card first then the second highest, etc.  (However, all of your cards except for the DCU essentially have the same interest rate range.)    

Thus,  I'd pay off both the Quicksilvers, Discover and your Amazon Prime.
Having four good cards at a zero balance is rewarding and a relief.   It may also help you avoid balance chasing by those issuers.

Then I would the focus paying much as possible on the WF and just min on the  DCU, Ulta, AE and ON.

Can you let us know how much you will have after the $7000 to pay monthly?

gl

[whitewolf361]

Yeah, that was making it difficult for me to decide which ones to pay towards first with the apr ranges being so close. 

I would have around $600-800 per month to put toward them, I believe. Depends on paycheck amounts (biweekly).

[RSX]

awesome that you have that Lump Sum - good work

here is how i would do it

after the Initial payoff, i would keep it simple and just pay minimum +$20 on every card - and then all extra funds go to the lowest amount CC American Eagle - then Disco 

Current

	Outstanding	CL	Percentage
Old Navy	1310	3000	43.67%
AmericanEagle	1767	1800	98.17%
Ulta	516	3000	17.20%
DCU	437	2000	21.85%
QuicksilverVisa	2557	3250	78.68%
QuicksilverMC	1535	2500	61.40%
Discover	1807	2000	90.35%
WellsFargo	7017	8000	87.71%
Amazon	876	1500	58.40%
	Payoff Amount
Old Navy	1310
AmericanEagle	877
Ulta	516
DCU	437
QuicksilverVisa	557
QuicksilverMC	1535
Discover	827
WellsFargo	200
Amazon	876
Total payoff	7135

You will end up with this

	Outstanding	CL	Percentage
Old Navy		3000	0.00%
AmericanEagle	890	1800	49.44%
Ulta		3000	0.00%
DCU		2000	0.00%
QuicksilverVisa	2000	3250	61.54%
QuicksilverMC		2500	0.00%
Discover	980	2000	49.00%
WellsFargo	6817	8000	85.21%
Amazon		1500	0.00%

This will serve multiple purposes - bump your scoring - keep the high usage Card companies from dropping your Limits (CLD) and show all the CC companies that you are actively paying down your outstanding debt

good luck to you!

[SlideOrInsert]

BEFORE	apr %	balance	limit	min	int $ / mo
Old Navy	28.99	1310	3000	41	32
Ulta	28.24	516	3000	38	12
American Eagle	28.24	1767	1800	60	42
Quicksilver MC	27.74	1535	2500	51	35
Wells Fargo Cashwise	26.49	7017	8000	214	155
Amazon Prime Visa	25.24	876	1500	45	18
Discover Chrome	25.24	1807	2000	56	38
Quicksilver Visa	22.24	2557	3250	74	47
DCU Visa	17.50	437	2000	35	6
TOTAL	25.99	17822	27050	614	386

I would do it this way.  this only leaves 3 of 9 accounts with a balance for that mental boost and makes it simple to avalanche pay the rest.  but clearly the blended interest rate barely changes even with the $7000 in payments.  after those accounts report paid on your credit report, it is probably time to seek out a credit union or other personal loan to see if you can at least cut that rate down.

AFTER	apr %	balance	limit	min	int $ / mo	pmt $
Old Navy	28.99	0	3000	0	0	-1310
Ulta	28.24	0	3000	0	0	-516
American Eagle	28.24	0	1800	0	0	-1767
Quicksilver MC	27.74	0	2500	0	0	-1535
Wells Fargo Cashwise	26.49	7017	8000	214	155	0
Amazon Prime Visa	25.24	0	1500	0	0	-876
Discover Chrome	25.24	1248	2000	56	26	-559
Quicksilver Visa	22.24	2557	3250	74	47	0
DCU Visa	17.50	0	2000	0	0	-437
TOTAL	25.34	10822	27050	344	229	-7000

I have no experience with wells fargo, do they regularly offer balance transfers?  if they do, alternately, you could pay off wells fargo and then balance transfer those same card balances to wells fargo at 0% or some low apr.  you'd be hard pressed to find a personal loan with a lower apr than that blended apr.

	apr %	balance	limit	min	int $ / mo	bt $
Old Navy	28.99	0	3000	0	0	-1310
Ulta	28.24	0	3000	0	0	-516
American Eagle	28.24	0	1800	0	0	-1767
Quicksilver MC	27.74	0	2500	0	0	-1535
Wells Fargo Cashwise	0.00	7000	8000	214	0	0
Amazon Prime Visa	25.24	0	1500	0	0	-876
Discover Chrome	25.24	1248	2000	56	26	-559
Quicksilver Visa	22.24	2557	3250	74	47	0
DCU Visa	17.50	0	2000	0	0	-437
TOTAL	8.18	10805	27050	344	74	-7000

[SouthJamaica]

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@whitewolf361 wrote:

So, I have quite a bit of debt that I've accumulated over the past 2 years, and I have the means right now to make a large payment towards that. With the increase in interest, my payments don't seem to making as much of a difference lately, so I need some advice on how to best pay my balances that can save me the most money per month, so I can knock out the remaining balances quicker. I want to use $7000 to pay towards my balances (/limit), here are my cards, balances, and APRs:

• Old Navy: $1310/3000 - min pay $40.55 - 28.99%
• American Eagle: $1767/1800 - min pay $60 - 28.24%
• Ulta: $516/3000 - min pay $38 - 28.24%
• DCU Visa: 437/2000 - min pay $25 or $35 - 17.5%
• Quicksilver Visa: $2557/3250 - min pay $74 - 22.24%
• Quicksilver MC: $1535/2500 - min oay $51 - 27.74%
• Discover Chrome: $1807/2000 - min pay $56 - 25.24%
• Wells Fargo Cashwise: $7017/8000 - min oay $214 - 26.49%
• Amazon Prime Visa: $876/1500 - min pay $45 - 25.24%

I was doing so well with cards, nearly had balances paid off in 2020, then had my hours cut to part time for a while. Then I got a new job and didn't have appropriate clothing, and had ended up spending way too much after that point. I just need a way to get my monthly payments down so I can pay the rest of these much easier/quicker. I have $7000 to put towards this. Any payment plan advice would be welcome.

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I would pay

- 1767 to American Eagle

- 516 to Ulta

- 1310 to Old Navy

- 1000 to Quicksilver Visa

- 400 to Quicksilver MC

- 200 to Amazon Prime Visa

- 1807 to Discover

[loyalsudz]

All of those items require an ongoing line item in your budget.  You have to decide if you need cushion, add in line items to your budget to get the big picture of where all your money is being spent monthly or to tackle this debt with a seasonal job.  It comes down to how much can you afford to pay off this debt each month with your current take home pay, and then it comes down to how long you are willing to add funds until the debt is paid in full.  

• First start with a simple budget that includes, food, housing, transportation/vehicle, insurance, retirement, savings, gifts, any other monthly  expenses.   Then add the debt minimums and how much extra you can afford to place on the least debt since the %APR are in the 20s% already.  
• Then add a column for the amount of time you wish to pay off the debt.   Will your current budget allow for 1, 3, 6, 12, 24, 36 months worth of payments?  Try to use your debt card during this period or a prepaid card that you can refill. The great part about most credit cards is that the apps do most of the work for you and include what you need to pay over an above the %APR so that you can make a dent in the payment with the right amount.  This may require not just the minimum because even that my not allow you to break even with APRs in this range.  Please just be prepared to almost pay double the minimum so that the bill does not snowball and double before you are able to start to pay what is allocated in your monthly budget.  And remember after 6 months of on-time payments, inquire with each creditor for a reduction in the APR amount.  It never hurts to ask.
• It can be fairly easy to add in Savings and think about a reverse savings plan for 52 weeks, you can start it now and you would only add $52 dollars or moving forward just add $1 and in about 52 weeks from now you will have approximately $1300 plus in savings.  The tortoise always wins.
• An emergency fund of at least $1000 dollars is always recommended.
• Add in an amount that is comfortable for any holiday travel and gifts as well.  Cap it with something modest maximum depending on what you spent last year as peak season is well underway. Think about opening a holiday account for next year that you can add a comfortable amount to so that every month you add $10 +plus dollars to it.
• Add in a guilt-free or fun money amount say $25 or $50, this is yours and for you so you are not in danger of not having your fill of self-care (super important spend or just let it add up, that way paying off debt is just another line item)-win/win. 

Finally, I highly recommended to start with about half of the $7000 windfall.  If you have never had $3500 or similar amount just sitting in your account month after month, it can really give you peace of mind.  And if something does come up you should be all set.  Plus, having an extra month worth of money just sitting your account will allow you to have all of next month's bills paid in full depending on the budget you set up.  What ever you decide to do set the payments on auto and remember you can always change them, just pick dates near your normal paycheck schedule (once a month, bi-weekly, weekly) with 2-days lag time to prevent unexpected hick-ups and keeping in time with existing credit card due dates which by the way you can change especially if one half of the month is top heavy.  Keeping half also, allows you to do something called self-lending.  Ask your bank about using part of your windfall as collateral.  This typically involves a set amount being frozen for a period of time and then you pay it back over time using your existing income and when you are done, the original amount less a fee is unfrozen as if you have a windfall and are your own bank of you.  Imagine, paying off the debt and also afterwards having the full windfall with no risk to creditors or the bank? Banks do this with holiday accounts every year and usually extend up to $5000 or more which can be paid back up to 2 year period.  But we are trying to get rid of debt so it is completely up to you?  Beware any missed payments on self-lending may be reported after all, you just became a bank (of you, love it or hate it)...

Edited add:

Disclaimer: While I am not an expert per se, please take my remarks with a grain of salt as I mean no offense to someone who clearly just wants to better their situation.  This is your budget and your fresh start, you make all the modifications you deem necessary and do not get caught up on what I stated about having $3500 in your checking at all times, that is just a for instance. I knew a couple written about in Kiplinger Magazine that always had $5000 play money and/ of course their take home pay was about $350,000 between the two of them annually.  And personal finance is different for everyone.  

[tcbofade]

First, you've received some excellent advice upthread.  I like all of it.

I would do it differently.  (Of course!) 

Pay American Eagle $887.

QuickSilver Visa $968.

QuickSilver MC $312.

Discover Chrome $829.

Wells Fargo $3105.

Amazon $876.

That's $6977.

After payments are received, and new statements cut on all of the above, you should see a very nice boost in your Fico 8 scores.  (All accounts under 48.9%)

Once that happens, you might consider some more zero percent intro balance transfer cards.... bank of america, citi, nfcu, wells fargo, usbank, discover.... there are plenty of them out there.

Good luck!