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How Much to Pay Down on Cards?

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Member

How Much to Pay Down on Cards?

As part of my divorce (yay!) settlement, we’re pulling some cash out of the house that I am keeping. I will pocket roughly $25K.  I don’t want to throw all of it at cc debt.  Some of it needs to go to a few home repairs, nothing major, probably less than $5K.

 

My cc utilization is off the charts at 80%.  The ex was having his checks direct deposited into secret accounts, over drawing the joint account ($37 a throw), and all kinds of gross financial mismanagement.  Thus, I was forced to put way too much on ccs (he has none, for obvious reasons).

 

Credit One $1396 @ 26.15% ($1800 limit)

Cap One $898 @ 25.15% ($1500 limit)

Ollo $1507 @ 25.74% ($2600 limit)

Ulta MC $1373 @29.24% ($2500 limit)

Discover $13,142 @0% ($15K limit)

Marcus/Goldman Sachs $5K @15.99% (unsecured personal loan)

 

Of course, the utilization is pushing my FICO down.  My payment history is 100% on time since 2015 when I had one a 30 day late on a cc.  It was a total oops thing.

 

So, how much cash should I take and throw at the ccs?  Which ones?

 

We should never have gotten into this mess.  There was sufficient money coming in to cover expenses.  The ex somehow made a complete shambles of things.  Everything was hidden from me.

 

I need guidance on how to fix this.  Thoughts?  Thank you.

 

 

 

 

 

 

 

Message 1 of 19
18 REPLIES 18
Regular Contributor

Re: How Much to Pay Down on Cards?


@jada03 wrote:

 

Credit One $1396 @ 26.15% ($1800 limit)

Cap One $898 @ 25.15% ($1500 limit)

Ollo $1507 @ 25.74% ($2600 limit)

Ulta MC $1373 @29.24% ($2500 limit)

Discover $13,142 @0% ($15K limit)

Marcus/Goldman Sachs $5K @15.99% (unsecured personal loan)

 


There's several ways you can go about this.  It depends on your immediate goals.  Are you looking to raise your scores first, or save on interest first?

 

First of all, if you have $20K coming (after house repairs), you have enough to pay all the CC debt, or all the debt that's charging interest.  I totaled up $18,316 for all the CCs excluding the $5k personal loan.  So you could just pay them all off and get your utilization down and score up.

 

If you are more interested in saving interest, you're in luck.  All your balances with interest are relatively small, so you can easily pay all of them off.  Then put any remaining funds toward the Discover to improve utilization.  How much longer do you have 0% on Disco?

 

If you don't want to put that much of the money toward debt, I'd pay off all the smaller cards first, especially the high interest ones.  Put some toward Disco to drop utilization, then pay the rest off over time.

 

Gardening starting 8/1/19
Goal: 0 Inquiries and diamond spade
July: EX 813, TU 821. 3 CCs, 1 mortgage, 5 inquiries.
Message 2 of 19
Contributor

Re: How Much to Pay Down on Cards?

Your listed debt totals $23,316. Pay it all off. Every penny. Then fix what you can on the house with remaining funds and save up for the rest of the repairs. If that debt was caused by the recklessness of an ex it’s gonna piss you off that much more to leave it hanging around. Be done.

If nothing else, pay that discover off. I realize it’s on 0% but if you mess around and let that promo APR expire with a large balance it’s gonna be tough to dig out of and it won’t be cheap.
Message 3 of 19
Super Contributor

Re: How Much to Pay Down on Cards?


@jada03 wrote:

As part of my divorce (yay!) settlement, we’re pulling some cash out of the house that I am keeping. I will pocket roughly $25K.  I don’t want to throw all of it at cc debt.  Some of it needs to go to a few home repairs, nothing major, probably less than $5K.

 

My cc utilization is off the charts at 80%.  The ex was having his checks direct deposited into secret accounts, over drawing the joint account ($37 a throw), and all kinds of gross financial mismanagement.  Thus, I was forced to put way too much on ccs (he has none, for obvious reasons).

 

Credit One $1396 @ 26.15% ($1800 limit)

Cap One $898 @ 25.15% ($1500 limit)

Ollo $1507 @ 25.74% ($2600 limit)

Ulta MC $1373 @29.24% ($2500 limit)

Discover $13,142 @0% ($15K limit)

Marcus/Goldman Sachs $5K @15.99% (unsecured personal loan)

 

Of course, the utilization is pushing my FICO down.  My payment history is 100% on time since 2015 when I had one a 30 day late on a cc.  It was a total oops thing.

 

So, how much cash should I take and throw at the ccs?  Which ones?

 

We should never have gotten into this mess.  There was sufficient money coming in to cover expenses.  The ex somehow made a complete shambles of things.  Everything was hidden from me.

 

I need guidance on how to fix this.  Thoughts?  Thank you.

 

 

 

 

 

 

 


You should pay off the 4 small ones completely, and the Discover card down to $4200 (28%).

 


FICO 8: EQ 735 TU 760 EX 729 Total revolving limits 719k (592500 reporting)
Message 4 of 19
Member

Re: How Much to Pay Down on Cards?

Paying it all to $0 will bring my utilization back down, but will eliminate positive active trade lines.

 

Plus, it leaves me with no cash reserves.  A good way to bump the ccs right back up in an emergency.

Message 5 of 19
Established Contributor

Re: How Much to Pay Down on Cards?


@jada03 wrote:

Paying it all to $0 will bring my utilization back down, but will eliminate positive active trade lines.

 

Plus, it leaves me with no cash reserves.  A good way to bump the ccs right back up in an emergency.


I would do the following:

  • $5k for house repairs,
  • $5k in high yield savings
  • $5,174 to pay off all the small cards
  • $9,826 toward the Discover, then make a payment plan for the balance before interest kicks in


Aug 2019:

Stats:
Message 6 of 19
Contributor

Re: How Much to Pay Down on Cards?

Only the Marcus account will close but the positive history will report for up to 10 years. Your revolving accounts will remain open. If you’re on this mortgage or have any other installment loan then you already have the optimal mix of accounts.

You could take $1,000 out of the $25k and stash it for emergencies. Work on increasing it as fast as humanly possible to several months of income. Then save for the home repairs. Either way if I’m you, I’m taking advantage of the opportunity and coming out of this without debt. Not gonna keep debt I know I have right now, at 20%+ interest, in exchange for debt I might have to incur for an emergency that hasn’t happened yet. But certainly save for it.

Edited: clarity
Message 7 of 19
Community Leader
Senior Contributor

Re: How Much to Pay Down on Cards?

Hi there

 

You have come to the right place for solid advice and options.  I’m going to start mine off with something someone told me eons ago and it has really helped me. You cannot save if you have debt. 

 

Right now the $25K seems like a windfall, which it is, but it can disappear in the blink of an eye. You’ll need something here, buy something there, a relative will need a couple of hundred, and so on and so on. You’ll keep pinching off of it and one day—just like that—it’s gone! And you’re left wondering where in the world did $25K go.

 

Of course, you have to decide what’s best for you; but if it were me, I would pay off every single cent of that debt. It is absolutely no feeling greater than being CC debt free. And as long as you’re paying that interest, it’ll be like a chokehold on your life and finances. It will be 7-10 years before you’ll get out of that kind of debt. Really think about that—YEARS!

 

Paying off all the debt now starts you off with a clean slate. Nothing dragging you down and draining you of energy. 

 

I wish you all the best and good luck on whatever path you choose to take. 

GOALS: Garden til APR 2020 and 800 Club



JUN 2019: EX 788, TU 794, EQ 779
DEC 2018: EX 777, TU 783, EQ 799

|| AmX Cash Magnet $25K || NFCU CashRewards $20K || Macy's $20K || Discover IT $18.7K || NFCU CLOC $15K || NFCU Platinum $12.5K || AmX ED $11.5K || CitiCostco $7K || CitiDC $6.3K ||
Message 8 of 19
Member

Re: How Much to Pay Down on Cards?

Where is it possible to find high yield savings right now?

Message 9 of 19
Community Leader
Senior Contributor

Re: How Much to Pay Down on Cards?


@jada03 wrote:

Where is it possible to find high yield savings right now?


 

IMO, the money one saves by not paying “high interest” on CCs is the highest yield savings to date. 

GOALS: Garden til APR 2020 and 800 Club



JUN 2019: EX 788, TU 794, EQ 779
DEC 2018: EX 777, TU 783, EQ 799

|| AmX Cash Magnet $25K || NFCU CashRewards $20K || Macy's $20K || Discover IT $18.7K || NFCU CLOC $15K || NFCU Platinum $12.5K || AmX ED $11.5K || CitiCostco $7K || CitiDC $6.3K ||
Message 10 of 19
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