@Anonymous wrote:Hello Everyone!
I'm new to these forums but have been a long time lurker. I've got a lot of help just by reading members threads and used much of the advice I've read here personally which has helped me a lot. However, the topic of this thread is more personal to me and I need some advice.
My wife and I recently got married and almost a year ago we bought our first home. A lot went into both since then, and I'll save you all the explanation as to what contributed to what. But after reviewing all of our bank and credit union accounts recently, I noticed we were in the red after paying all our bills by -$660/ month!
Once I put it all together I immediately freaked out and my wife and I had a huge talk to discuss our options.
1. First thing we did was to give my in-laws our cards to prevent us from using them until this is all under control.
2. Consolidate our CU's and Bank accts into 2 or 3 total, since we still have our separate accounts from before we got married.
3. I had app'd to PenFed (one of 6 CU's I'm a member of) and took out a $25k personal loan for consolidating these debts. (Approv. for 5yr/10.99%)
This leaves me to where I am now at. Right now we have $38k (across all accts and loan funds) available to pay down our current debts. I'm trying to find the best way to pay off the debts that have the highest monthly minimums without completely draining our savings. I figured in doing so, this will get our minimum monthly spending back into the black and we can then budget groceries, gas and savings from that. I'm not sure what is better at that point. Putting leftover into savings or putting the leftover into a specific card for a snowball attempt. I'd love to put as much of our available funds into savings because I hate this situation and want as much emergency funds as possible.
Here are the debts (CC's and Loans) and their minimum monthly (in order of highest monthly payments (does not include the new Penfed Loan):
1. Loan - $11,470 / $421
2. Loan - $5935 / $276
3. Cap1 - $12,220 / $270
4. Lowes - $7560 / $240
5. Cap1 - $8645 / $220
6. Amex - $6575 / $203
7. Cap1 - $7140 / $200
8. Loan - $8585 / $200
9. Cap1 - $4320 / $150
10. Paypal - $3600 / $110
11. Discover - $3450 / $102
12. Amazon - $5000 / $100
13. PenFed CC - $4345 / $87
14. Barclay - $4670 / $84
15. Kohls - $660 / $45
16. BestBuy - $3200 / $40
17. CitiBank - $1500 / $25
These are the debts we have.
The ones in red are, I'm considering, to be the best use of the cash we have on hand to pay off now and provide us the most monthly leftover for savings and misc spending (groceries, gas, etc). Unfortunately, this will take our savings down to around $6k left which I HATE but is necessary to stop the bleeding. Paying these off will allow us to have approx $550/month for those miscellaneous expenses and savings. The -$660 right now also contains our verizon plan which also has our two siblings on. We have already arranged to get them off immediately, which will bring our $200 plan down to around $50/month. The -$660 also has our electric bill at $250 since our home is all electric. That was around the worst case bill during the winter. Normally it's around $70/month. These extra funds will be added to our monthly available of $550 to hopefully average around $800 - 850/month in the black. Also keep in mind this is minimum payments on the cards.
Questions:
1. After groceries, gas, etc.... what percentage should go to savings and rest go a debts principal?
2. Which snowball would you suggest; smallest debts first or highest APR?
3. Should I put more of the $6k left in our savings towards another card(s)?
4. I hate paying two of the loans off. But fact is for the amount of the monthly payment and the amount left, it makes the most sense I feel. Is this smart?
5. If 'yes' to #4, after these payoffs and other CC's go to $0, should I app for another consolidation loan to get other cards paid off? (my mid is 690, wife's is 660)
6. Even though we really screwed up, is this the best approach to get a handle on this situation?
Thanks everyone for your input! I apologize for the long thread. But this has been keeping us up at night so I'm really looking forward to getting the ball rolling on this!
1. I personally find it crazy to be paying credit card companies 10% to 25% interest while I'm lending $38k to them at 1% or less. That wouldn't give me the slightest bit of "peace of mind". My view is once you get to the point of your cards and loans being paid in full, and you're paying no interest, then put your surplus into savings.
2. I can't tell you specifically which debts should be paid off because you haven't told me credit limits and original amounts of loans, but generally speaking I favor
the snowball approach to revolving accounts.... paying the smallest balances down to zero and then moving on to the next smallest and so on, so that your cash flow from minimum payments that are extinguished can then be applied to the remaining debts.
3. As far as installment loans are concerned I think you should pay them monthly until all your revolving balances are gone, and then tackle the installment debt as well.
4. As to the specific six questions you ask:
1. I don't think you should be putting anything into savings at this time
2. Snowball method means paying smallest balances down to zero first
3. Yes anything in savings should be paying down your debt
4. I don't think you should pay off the loans until after you've paid off the revolving debt
5. No more consolidation loans; they are mortgaging your future and strangling you.
6. Is what the best approach? IMHO the best approach is to concentrate on getting your revolving debt paid off.
@Anonymous wrote:
@SouthJamaica wrote:
@Anonymous wrote:Hello Everyone!
I'm new to these forums but have been a long time lurker. I've got a lot of help just by reading members threads and used much of the advice I've read here personally which has helped me a lot. However, the topic of this thread is more personal to me and I need some advice.
My wife and I recently got married and almost a year ago we bought our first home. A lot went into both since then, and I'll save you all the explanation as to what contributed to what. But after reviewing all of our bank and credit union accounts recently, I noticed we were in the red after paying all our bills by -$660/ month!
Once I put it all together I immediately freaked out and my wife and I had a huge talk to discuss our options.
1. First thing we did was to give my in-laws our cards to prevent us from using them until this is all under control.
2. Consolidate our CU's and Bank accts into 2 or 3 total, since we still have our separate accounts from before we got married.
3. I had app'd to PenFed (one of 6 CU's I'm a member of) and took out a $25k personal loan for consolidating these debts. (Approv. for 5yr/10.99%)
This leaves me to where I am now at. Right now we have $38k (across all accts and loan funds) available to pay down our current debts. I'm trying to find the best way to pay off the debts that have the highest monthly minimums without completely draining our savings. I figured in doing so, this will get our minimum monthly spending back into the black and we can then budget groceries, gas and savings from that. I'm not sure what is better at that point. Putting leftover into savings or putting the leftover into a specific card for a snowball attempt. I'd love to put as much of our available funds into savings because I hate this situation and want as much emergency funds as possible.
Here are the debts (CC's and Loans) and their minimum monthly (in order of highest monthly payments (does not include the new Penfed Loan):
1. Loan - $11,470 / $421
2. Loan - $5935 / $276
3. Cap1 - $12,220 / $270
4. Lowes - $7560 / $240
5. Cap1 - $8645 / $220
6. Amex - $6575 / $203
7. Cap1 - $7140 / $200
8. Loan - $8585 / $200
9. Cap1 - $4320 / $150
10. Paypal - $3600 / $110
11. Discover - $3450 / $102
12. Amazon - $5000 / $100
13. PenFed CC - $4345 / $87
14. Barclay - $4670 / $84
15. Kohls - $660 / $45
16. BestBuy - $3200 / $40
17. CitiBank - $1500 / $25
These are the debts we have.
The ones in red are, I'm considering, to be the best use of the cash we have on hand to pay off now and provide us the most monthly leftover for savings and misc spending (groceries, gas, etc). Unfortunately, this will take our savings down to around $6k left which I HATE but is necessary to stop the bleeding. Paying these off will allow us to have approx $550/month for those miscellaneous expenses and savings. The -$660 right now also contains our verizon plan which also has our two siblings on. We have already arranged to get them off immediately, which will bring our $200 plan down to around $50/month. The -$660 also has our electric bill at $250 since our home is all electric. That was around the worst case bill during the winter. Normally it's around $70/month. These extra funds will be added to our monthly available of $550 to hopefully average around $800 - 850/month in the black. Also keep in mind this is minimum payments on the cards.
Questions:
1. After groceries, gas, etc.... what percentage should go to savings and rest go a debts principal?
2. Which snowball would you suggest; smallest debts first or highest APR?
3. Should I put more of the $6k left in our savings towards another card(s)?
4. I hate paying two of the loans off. But fact is for the amount of the monthly payment and the amount left, it makes the most sense I feel. Is this smart?
5. If 'yes' to #4, after these payoffs and other CC's go to $0, should I app for another consolidation loan to get other cards paid off? (my mid is 690, wife's is 660)
6. Even though we really screwed up, is this the best approach to get a handle on this situation?
Thanks everyone for your input! I apologize for the long thread. But this has been keeping us up at night so I'm really looking forward to getting the ball rolling on this!
1. I personally find it crazy to be paying credit card companies 10% to 25% interest while I'm lending $38k to them at 1% or less. That wouldn't give me the slightest bit of "peace of mind". My view is once you get to the point of your cards and loans being paid in full, and you're paying no interest, then put your surplus into savings.
2. I can't tell you specifically which debts should be paid off because you haven't told me credit limits and original amounts of loans, but generally speaking I favor
the snowball approach to revolving accounts.... paying the smallest balances down to zero and then moving on to the next smallest and so on, so that your cash flow from minimum payments that are extinguished can then be applied to the remaining debts.
3. As far as installment loans are concerned I think you should pay them monthly until all your revolving balances are gone, and then tackle the installment debt as well.
4. As to the specific six questions you ask:
1. I don't think you should be putting anything into savings at this time
2. Snowball method means paying smallest balances down to zero first
3. Yes anything in savings should be paying down your debt
4. I don't think you should pay off the loans until after you've paid off the revolving debt
5. No more consolidation loans; they are mortgaging your future and strangling you.
6. Is what the best approach? IMHO the best approach is to concentrate on getting your revolving debt paid off.
Thank you for your help.
So let me fully understand what you posted.
1. You believe I should put everything we have towards our CC's and not any towards the loans other than the monthly
Yes at this time I think you should first concentrate on getting rid of the revolving debt.
2. You do not think I should be putting anything into savings until cards are paid off
Correct. I consider it self-delusion to treat money you've borrowed at high interest rates as "savings".
3. No more loans to consolidate the rest.
Right, the "debt consolidation" racket is a way of tying you up long term. You can't borrow yourself out of debt.
While I considered your input, I'm a VERY VERY afraid to deplete our savings completely. The only reason I was willing to pay off two of the loans was due to the amount currently owed for payoff vs monthly payments. Paying the two off immediately got my current payments (loans, CC's, mortgage and utlilities) out of the red and into the black. After that, I was going to put as much as possible into paying off the cards completely.
I wouldn't have any issues with putting most of the money each month to paying off my revolving debt, maintaining other bills of course, and putting a small percentage each month to keeping the savings growing for emergency cases. It just worries me to not having cash available. And even then, if I do place all of our funds into cards, it will only pay off one or two other cards.
I hope my worries about my savings is making sense?
To many people it would make sense; to me it doesn't.
I do agree with you that another consolidation loan from one of my CU's is not the answer.
I will have to discuss your input with my wife and see how she feels about this approach.
I'm ;honored that you'd bring my input to your boss
Thanks again for this approach! Something else for us to think about!
ETA:
I do agree also with the snowball effect. That's definitely going to happen no matter which approach my wife and I decide to take.
