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Ok, so I was doing alright for awhile, and now I'm swimming in debt due to medical bills yet again! I've got an idea possibly on how to start to tackle this, but want to make sure my head is in the right direction. I want to start by saying I don't want to open any more CC's for a BT option(besides, with my debt right now, I prob wouldn't even be able to get one lol). I just want to try and work with what I have, if that's possible.
Current cards/debt I have right now are:
NFCU cashRewards(17.65% APR) - 20029/24600 - Min Pay = 409
NFCU Platinum(7.99%) - 5304/10100 - Min Pay = 110
NFCU CLOC(17.9%) - 0/15000
Cap1 Venture(20.15%) - 7804/10950 - Min Pay = 188
Discover(24.99%) - 4317/4500 - Min Pay = 110
Amex(23.99%) - 25/500 - Min Pay = 25
Amex(22.99%) - 9582/10800 - Min Pay = 294
Citi(22.99%) - 172/1000 - Min Pay = 25
Min CC payments each month = 1161
Money left over each month(after paying rent/bills, but not including CC payments) = 1622
Money left over each month(after paying everything) = 461
I have some money in a TSP account, and about 10k left over in a 401k from another job I had before. I REALLY hate using the TSP money, but if I have to, I had the idea of getting a TSP loan for a low %, and paying off chunks of the high APR cards as much as possible. I was also going to try rolling over the 401k to the TSP, since I'm pretty sure the TSP will make me more money anyways. I'm not sure if I can utilize the 10k from the 401k after it gets transferred to the TSP or not. While paying off the TSP(no idea how long of a loan I would do), I thought I might be able to use the savings from the old high APR payments, and start snowballing from there.
I've also been trying to get overtime at work, but with no success. I could always try to get a second job for extra hours per week, however the OT would net me more money for this(if I can get some).
I'm not even sure which cards to start with, other than the high APR ones. I also had some sort of idea about using my 8% Platinum in a BT scenario.
I'll know more in a couple days of the $$ amount I'd be able to use from my TSP.
TIA, if anyone can give me some good pointers. I hate getting sick, it really messes up my life plans.
ETA: I think I also read a TSP loan doesn't get reported to the CRA's? And every payment would be going back to myself each month.
DON'T TOUCH YOUR RETIREMENT!
I especially hate seeing this because so many people do it in an attempt to straighten things out. Should they later end up in BK, they blew retirement funds that otherwise would have been protected.
Get that second job if your requests for OT are going nowhere.
I'd ask for a CLI on your NFCU Platinum and YES, BT as much as you can to it to get it at 7.99%. Ask them for a rate reduction on your other card while you're at it.
Then aside from the 8% card, snowball the rest.
Also if you have a car payment I'd recommend selling it private party and buying something cheap for cash until you're out of debt. I love cars but they are a colossal waste of money. All it needs to do is get you from point A to B.
*unless that car can become part of your income stream i.e. Uber which would require you to have a car of a certain age, condition, etc.
How much money can you spare per month to put toward your debts? Can you cut unnecessary expenses (i.e. cable, Netflix, gym) to save some money?
There are two schools of thought regarding paying down debt. Snowball vs. Avalanche. Both are similar, but differ in how you choose which debt to pay down first. With Snowball, you start with the smallest balances first, pay them off, and as you do, you then apply the money toward the next smallest balance, and so forth, while making minimum payments on the rest. With Avalanche, you do the same except you tackle the debt with the highest APR first. As each debt is paid off, its minimum payment is eliminated, leaving you more money to put toward the next debt, which is where the term "snowball" or "avalanche" comes from. As each debt is paid, you're freeing up resources to put toward the next debt, as interest and minimum payments are eliminated.
Snowball gives faster "satisfaction" as you get smaller debts out of the way, but you end up paying more in interest. Avalanche saves more money over time, but takes longer to zero out each account if they're large balances.
Since you're concerned about the APRs, I'd go with the avalanche method. Start with the Discover, paying that one down as quickly as possible, then move on to the two Amexes, then the Citi. You may just decide to PIF those smaller balances right off to get them out of the way, so snowball those and then avalanche the rest.
Depending on how much you're putting toward minimum payments, you might find a mix of snowball and avalanche will work best. Maybe play with it in Excel and see which method would get you "avalanching" faster. Even if the interest costs more over the long haul, snowball might free up money to pay down the debts faster. That's one reason to maybe snowball the smallest 3 or 4 balances to get rid of their minimum payments, then switch to avalanche afterward.
Regardless of which method you use, make sure not to put new charges on your cards to incur more debt, or you'll just prolong the suffering.
Good luck!
You do not specify what you can afford to pay each month towards the debt, nor your income. The above advice is pretty general for debt payoff: avalanche/snowball, etc.
Pay off the 25/172 and BT the discover 4317 to nfcu platinum. That totals $47036 debt and assuming each creditor requires at least 2% min payment each month, that is $941. $674 of that is interest!
The first table estimates the monthly payment to pay off in the specified number of months. The second table estimates the cumulative interest paid over those specified number of months.
PMT | % | $ | 24 | 36 | 48 | 60 |
nfcu cashrewards | 17.65 | 20029 | −997 | −721 | −585 | −505 |
amex | 22.99 | 9582 | −502 | −371 | −307 | −270 |
cap1 venture | 20.15 | 7804 | −398 | −291 | −238 | −207 |
nfcu platinum | 7.99 | 9621 | −435 | −301 | −235 | −195 |
TOTAL | 47036 | −2,331 | −1,684 | −1,365 | −1,177 |
CUMIPMT | % | $ | 24 | 36 | 48 | 60 |
nfcu cashrewards | 17.65 | 20029 | −3,888 | −5,912 | −8,036 | −10,259 |
amex | 22.99 | 9582 | −2,461 | −3,769 | −5,157 | −6,622 |
cap1 venture | 20.15 | 7804 | −1,742 | −2,658 | −3,625 | −4,641 |
nfcu platinum | 7.99 | 9621 | −821 | −1,231 | −1,651 | −2,081 |
TOTAL | 47036 | −8,913 | −13,571 | −18,469 | −23,603 |
Point being, if you can not budget to pay off $47000 in 2-3 years MAX, you are paying tens of thousands of dollars in interest to hold on to that 10K 401k+TSP.
Lastly, you mention an nfcu cloc, why would you not use it if it is of any significant limit? According to the nfcu website, your apr should be in the 13.9-17.9%
9/2022 $30000 | 8/2020 $20000 | 12/2018 $30000 | 8/2016 $30000 | 3/2016 $21000 | 5/2014 $20000 | 10/2007 $8900 |
Added min payments on each card, my cloc info, and how much I have left over each month to put towards the CC's.
Basically, right now I have 400-500 left over each month to put towards CC's after all my bills & min CC payments are made. My entire paycheck is going towards this right now.
@Rebuilding69 wrote:Ok, so I was doing alright for awhile, and now I'm swimming in debt due to medical bills yet again! I've got an idea possibly on how to start to tackle this, but want to make sure my head is in the right direction. I want to start by saying I don't want to open any more CC's for a BT option(besides, with my debt right now, I prob wouldn't even be able to get one lol). I just want to try and work with what I have, if that's possible.
Current cards/debt I have right now are:
NFCU cashRewards(17.65% APR) - 20029/24600 - Min Pay = 409
NFCU Platinum(7.99%) - 5304/10100 - Min Pay = 110NFCU CLOC(17.9%) - 0/15000
Cap1 Venture(20.15%) - 7804/10950 - Min Pay = 188
Discover(24.99%) - 4317/4500 - Min Pay = 110
Amex(23.99%) - 25/500 - Min Pay = 25
Amex(22.99%) - 9582/10800 - Min Pay = 294
Citi(22.99%) - 172/1000 - Min Pay = 25
Min CC payments each month = 1161
Money left over each month(after paying rent/bills, but not including CC payments) = 1622
Money left over each month(after paying everything) = 461
I have some money in a TSP account, and about 10k left over in a 401k from another job I had before. I REALLY hate using the TSP money, but if I have to, I had the idea of getting a TSP loan for a low %, and paying off chunks of the high APR cards as much as possible. I was also going to try rolling over the 401k to the TSP, since I'm pretty sure the TSP will make me more money anyways. I'm not sure if I can utilize the 10k from the 401k after it gets transferred to the TSP or not. While paying off the TSP(no idea how long of a loan I would do), I thought I might be able to use the savings from the old high APR payments, and start snowballing from there.
I've also been trying to get overtime at work, but with no success. I could always try to get a second job for extra hours per week, however the OT would net me more money for this(if I can get some).
I'm not even sure which cards to start with, other than the high APR ones. I also had some sort of idea about using my 8% Platinum in a BT scenario.
I'll know more in a couple days of the $$ amount I'd be able to use from my TSP.
TIA, if anyone can give me some good pointers. I hate getting sick, it really messes up my life plans.
ETA: I think I also read a TSP loan doesn't get reported to the CRA's? And every payment would be going back to myself each month.
I would go with snowball method:
1. Stop using cards.
2. Pay off smallest balance first, then next smallest, and so on.
3. On other cards pay minimum + something each month.
As each balance turns to zero, that will free up your remaining monthly cash to apply to the next smallest balance.
spend the next two months saving that 400-500 extra for a $1000 emergency fund. pay off the 25/172. BT the discover 4317 to nfcu platinum, pay off amex 9582 and 4400 from cap1 with your cloc.
at that point, I think 1400 a month is not only aggressive but requires a lot of discipline to commit to for 40+ months, almost too much. but if you can do more then it will save some interest. because life happens unexpectedly, that still leaves you with a 100-200 buffer per month.
consider the following payment schedule:
first 6 months | apr | bal | pmt | cumipmt |
cap1 venture | 20.15 | 3404 | 601 | $203 |
nfcu cashrewards | 17.65 | 20029 | 409 | $1,742 |
nfcu cloc | 17.9 | 13986 | 280 | $1,235 |
nfcu platinum | 7.99 | 9621 | 110 | $380 |
next 23 months | apr | bal | pmt | cumipmt |
nfcu cashrewards | 17.65 | 19313 | 1010 | $3,591 |
nfcu cloc | 17.9 | 13539 | 280 | $4,315 |
nfcu platinum | 7.99 | 9342 | 110 | $1,347 |
next 10 months | apr | bal | pmt | cumipmt |
nfcu cloc | 17.9 | 11404 | 1290 | $956 |
nfcu platinum | 7.99 | 8164 | 110 | $527 |
next 6 months | apr | bal | pmt | cumipmt |
nfcu platinum | 7.99 | 7593 | 1400 | $178 |
TOTAL | $14,474 |
debt payoff costs 14474 in interest and 45 months. the numbers are rough because...rounding. I made a couple of assumptions: individual utility is not a concern as there are a couple that start out 90%+, and that you are willing to utilize the cloc with the lower apr, yet still not willing to dip into the 401k+TSP.
9/2022 $30000 | 8/2020 $20000 | 12/2018 $30000 | 8/2016 $30000 | 3/2016 $21000 | 5/2014 $20000 | 10/2007 $8900 |