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Should I snowball my way out or give up?

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Anonymous
Not applicable

Should I snowball my way out or give up?

Mental health issues (under control now) that caused me to overextend myself on my credit over the past decade has left me at the current standing. Now at the age of 31 so credit is very important to me and I try my hardest not to receive any late payments/derogatories as my score has been increasing over time. 

 

Credit Cards/LOCBalanceCredit Limit
Capital One Walmart $2,143.97  $3,100.00 
Citi Diamond Preferred $7,743.99  $8,000.00 
AMEX Everyday$177.50 $800.00 
Discover IT$5,348.64 $6,000.00 
NFCU GoRewards $6,746.81  $7,000.00 
Chase Amazon Prime Rewards  $-00  $1,500.00 
NFCU CLOC$4,392.11 $5,000.00 
Totals  $26,553.02  $31,400.00 
Retrieving data. Wait a few seconds and try to cut or copy again.

 

LoansBalanceLoan AmountPAID
Element Financials Auto $17,992.49  $20,349.17  $2,356.68 
Lending Club $7,658.40  $8,000.00  $341.60 
TOTAL LOAN BALANCE$25,650.89$28,349.17$2,698.28

 

I am currently $52k in debt, I used a snowball calculator and I can snowball myself out of this debt within 5 years considering I follow through with the plan. My credit score stands @ 677. Currently paying $1200 in debt payments including all CC's, loan, and car payment. My monthly income after taxes is $2600-2800 per month (I am actively pursuing a 2nd job to increase this to possible around $3200 per month.) After rent, utilities, etc I am typically left with an extra $600-700 a month that doesn't account for necessities such as food and gas which totals to around $150-200. I have a 100% on time payment history on my credit report currently as well. 

 

Should I continue with a snowball plan and further decrease my debt overtime while improving my credit score or bite the bullet on a BK 13 which allows me to keep my car BUT the area I live in does credit checks so finding a place to live would be impossible which is a HUGE factor for me. 

 

Am I being too optimistic about paying this debt down and over taking a monster that I cannot beat down? 

Message 1 of 27
26 REPLIES 26
GrainFan
New Contributor

Re: Should I snowball my way out or give up?

You can definitely dig yourself out of this, but I'd try to approach it smartly. See if you can open any new cards with 0% BT offers (some have soft pulls- think FNBO Evergreen); a small 3% transfer fee is nothing compared to the interest you're paying right now. If not, consider a consolidation loan or any form of refi. I can't personally vouch for this, but you could try calling each lender and explaining your situation- there have been DPs on this forum of companies extending 0% APR payment plans and other helpful terms, as long as you clearly communicate your intent to pay your balance. They want you to pay off your bills; sending accounts to collections only yields them a fraction of your original balance. Snowballing isn't a bad idea, but tackling the one with the highest interest % first could also be good- make sure that your more of your minimum payments are going to prinicipal, not fees/interest. At the end of the day, having food on the table and your own sanity trumps making huge monthly payments that overwhelmingly go to interest- BK is an option. But, take my advice with a grain of salt, and make sure you do plenty of your own research. Best of luck!





Message 2 of 27
Slowlyrebuilding
Contributor

Re: Should I snowball my way out or give up?

Well, I think your income is your problem. Your monthly budget is so tight. 
Have you discussed bk options with a lawyer? First to see if your could be exempted in a Ch 7? 
If you go the bankruptcy route you'll stop paying all your debts. You could take all that money and buy a car for cash. If you can out of a bk with no debts and a car that's paid for, then you could focus on building up savings for a big security deposit for a new place. 
I went through ch 13 and it was hard to find a place but not impossible. Once I rented from a private owner and after a few years out I was approved for places but just with a larger deposit.

if you think a second job is viable and you could stick to it for at least a few years then snowballing or avalanche could work. 
also your credit score might be high enough for a debt consolidation loan.

Message 3 of 27
jmw1
Frequent Contributor

Re: Should I snowball my way out or give up?

You don't need a 13 to keep your car.  You can ride through (preferred), 722 redemption, reaffirm (highly do not recommend given your car loan balances), or surrender if you are way upside down.

 

I would talk to a BK attorney. You will feel a lot better after doing a 7. Most people wished they done it earlier. If you are skipping mandatory expenses like a minimal 3% 401k contribution, health insurance, auto insurance, medical expenses, maintenance fund for the car other than credit, etc.... your snowball plan is absolutely un-doable.  Can you keep two jobs for five years?  I wouldn't want to try that. 

 

If you absolutely have to move, do it now before you start missing minimums and definitely before BK.

 

Message 4 of 27
Anonymous
Not applicable

Re: Should I snowball my way out or give up?


@jmw1 wrote:

You don't need a 13 to keep your car.  You can ride through (preferred), 722 redemption, reaffirm (highly do not recommend given your car loan balances), or surrender if you are way upside down.

 

I would talk to a BK attorney. You will feel a lot better after doing a 7. Most people wished they done it earlier. If you are skipping mandatory expenses like a minimal 3% 401k contribution, health insurance, auto insurance, medical expenses, maintenance fund for the car other than credit, etc.... your snowball plan is absolutely un-doable.  Can you keep two jobs for five years?  I wouldn't want to try that. 

 

If you absolutely have to move, do it now before you start missing minimums and definitely before BK.

 


Health, dental, and vision insurance are factored in and included before my total take home pay. Car insurance is also part of my living expenses that I included into the rent+utilities.

 

I havent had trouble paying my minimums at all but I guess snowballing what I can is not going to help huh? I calculated a $100 starting snowball onto my lowest debt card into the calculation as well. My biggest fear with BK is not being able to find a place to live where I work at which is already hard to find rentals as is considering my SO has a dog and there aren't a lot of options after factoring that in. 

 

@GrainFan wrote:

You can definitely dig yourself out of this, but I'd try to approach it smartly. See if you can open any new cards with 0% BT offers (some have soft pulls- think FNBO Evergreen); a small 3% transfer fee is nothing compared to the interest you're paying right now. If not, consider a consolidation loan or any form of refi. I can't personally vouch for this, but you could try calling each lender and explaining your situation- there have been DPs on this forum of companies extending 0% APR payment plans and other helpful terms, as long as you clearly communicate your intent to pay your balance. They want you to pay off your bills; sending accounts to collections only yields them a fraction of your original balance. Snowballing isn't a bad idea, but tackling the one with the highest interest % first could also be good- make sure that your more of your minimum payments are going to prinicipal, not fees/interest. At the end of the day, having food on the table and your own sanity trumps making huge monthly payments that overwhelmingly go to interest- BK is an option. But, take my advice with a grain of salt, and make sure you do plenty of your own research. Best of luck!


I was hoping snowballing would be a problem solver even though long term and takes discipline I felt like I could maybe pull it off considering I haven't missed any payments yet so I do have a chance of maintaining/increasing my score while shooting for BT offers when I can during the snowball process.

 



@Slowlyrebuilding wrote:

Well, I think your income is your problem. Your monthly budget is so tight. 
Have you discussed bk options with a lawyer? First to see if your could be exempted in a Ch 7? 
If you go the bankruptcy route you'll stop paying all your debts. You could take all that money and buy a car for cash. If you can out of a bk with no debts and a car that's paid for, then you could focus on building up savings for a big security deposit for a new place. 
I went through ch 13 and it was hard to find a place but not impossible. Once I rented from a private owner and after a few years out I was approved for places but just with a larger deposit.

if you think a second job is viable and you could stick to it for at least a few years then snowballing or avalanche could work. 
also your credit score might be high enough for a debt consolidation loan.


Unfortunately I cannot go without a car for more than a week, this is my only transportation to and from work for my monthly income. I don't mind the car payments on it at all. 



 

 

Message 5 of 27
tcbofade
Super Contributor

Re: Should I snowball my way out or give up?

Been there, done that.

 

I chose the 2nd job route for four and a half years.  (Delivered pizzas Friday night, all day Saturday and Sunday... made $400ish per week!)  A second job might provide you more income than you think.

 

Your score isn't bad.

 

Get the two that are maxed out under 88% individual utilization, and you should see a nice score boost.  If you can, get every account under 68% individual utilization.  700s?

 

No judgement, and it's your call to make.  Bankruptcy is a valid legal option.  

 

This is doable.

 

Good luck!

 

02/01/24 Fico 8: EX 757, EQ 803, TU 783.
Fico 9: EX 760 12/16/23, EQ 790 02/04/24, TU No idea.

Zero percent financing is where the devil lives...
Message 6 of 27
SouthJamaica
Mega Contributor

Re: Should I snowball my way out or give up?


@Anonymous wrote:

Mental health issues (under control now) that caused me to overextend myself on my credit over the past decade has left me at the current standing. Now at the age of 31 so credit is very important to me and I try my hardest not to receive any late payments/derogatories as my score has been increasing over time. 

 

Credit Cards/LOCBalanceCredit Limit
Capital One Walmart $2,143.97  $3,100.00 
Citi Diamond Preferred $7,743.99  $8,000.00 
AMEX Everyday$177.50 $800.00 
Discover IT$5,348.64 $6,000.00 
NFCU GoRewards $6,746.81  $7,000.00 
Chase Amazon Prime Rewards  $-00  $1,500.00 
NFCU CLOC$4,392.11 $5,000.00 
Totals  $26,553.02  $31,400.00 
Retrieving data. Wait a few seconds and try to cut or copy again.

 

LoansBalanceLoan AmountPAID
Element Financials Auto $17,992.49  $20,349.17  $2,356.68 
Lending Club $7,658.40  $8,000.00  $341.60 
TOTAL LOAN BALANCE$25,650.89$28,349.17$2,698.28

 

I am currently $52k in debt, I used a snowball calculator and I can snowball myself out of this debt within 5 years considering I follow through with the plan. My credit score stands @ 677. Currently paying $1200 in debt payments including all CC's, loan, and car payment. My monthly income after taxes is $2600-2800 per month (I am actively pursuing a 2nd job to increase this to possible around $3200 per month.) After rent, utilities, etc I am typically left with an extra $600-700 a month that doesn't account for necessities such as food and gas which totals to around $150-200. I have a 100% on time payment history on my credit report currently as well. 

 

Should I continue with a snowball plan and further decrease my debt overtime while improving my credit score or bite the bullet on a BK 13 which allows me to keep my car BUT the area I live in does credit checks so finding a place to live would be impossible which is a HUGE factor for me. 

 

Am I being too optimistic about paying this debt down and over taking a monster that I cannot beat down? 


No you are not being too optimistic. You are doing a fantastic job. Stay the course.

 

As far as the installment loans go, just make the monthly payments.

 

On the revolving credit, absolutely snowball it. Just pay the smallest balance, then the next smallest, and so on. Pay the minimum + $5 on the others.

 

You're going to get there!

 

If you feel that it would help your spirits to see some faster score boosts, follow @tcbofade 's advice to go after some thresholds first -- i.e. get everything down to 88% or lower, then 78% or lower, and so on.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 7 of 27
Anonymous
Not applicable

Re: Should I snowball my way out or give up?


@tcbofade wrote:

Been there, done that.

 

I chose the 2nd job route for four and a half years.  (Delivered pizzas Friday night, all day Saturday and Sunday... made $400ish per week!)  A second job might provide you more income than you think.

 

Your score isn't bad.

 

Get the two that are maxed out under 88% individual utilization, and you should see a nice score boost.  If you can, get every account under 68% individual utilization.  700s?

 

No judgement, and it's your call to make.  Bankruptcy is a valid legal option.  

 

This is doable.

 

Good luck!

 


The 2nd job would mainly go 100% towards debt and further my snowballing method which is what I was hoping for. BK is just a last resort option for me and I don't even know if it's a good option considering I am current on all my payments so I have yet to fall behind with this debt load for the past year or two. I just haven't been as motivated as I am until these current days now that I am medicated, mentally in a better place, and focused on straightening my finances.

Message 8 of 27
Anonymous
Not applicable

Re: Should I snowball my way out or give up?


@SouthJamaica wrote:

@Anonymous wrote:

Mental health issues (under control now) that caused me to overextend myself on my credit over the past decade has left me at the current standing. Now at the age of 31 so credit is very important to me and I try my hardest not to receive any late payments/derogatories as my score has been increasing over time. 

 

Credit Cards/LOCBalanceCredit Limit
Capital One Walmart $2,143.97  $3,100.00 
Citi Diamond Preferred $7,743.99  $8,000.00 
AMEX Everyday$177.50 $800.00 
Discover IT$5,348.64 $6,000.00 
NFCU GoRewards $6,746.81  $7,000.00 
Chase Amazon Prime Rewards  $-00  $1,500.00 
NFCU CLOC$4,392.11 $5,000.00 
Totals  $26,553.02  $31,400.00 
Retrieving data. Wait a few seconds and try to cut or copy again.

 

LoansBalanceLoan AmountPAID
Element Financials Auto $17,992.49  $20,349.17  $2,356.68 
Lending Club $7,658.40  $8,000.00  $341.60 
TOTAL LOAN BALANCE$25,650.89$28,349.17$2,698.28

 

I am currently $52k in debt, I used a snowball calculator and I can snowball myself out of this debt within 5 years considering I follow through with the plan. My credit score stands @ 677. Currently paying $1200 in debt payments including all CC's, loan, and car payment. My monthly income after taxes is $2600-2800 per month (I am actively pursuing a 2nd job to increase this to possible around $3200 per month.) After rent, utilities, etc I am typically left with an extra $600-700 a month that doesn't account for necessities such as food and gas which totals to around $150-200. I have a 100% on time payment history on my credit report currently as well. 

 

Should I continue with a snowball plan and further decrease my debt overtime while improving my credit score or bite the bullet on a BK 13 which allows me to keep my car BUT the area I live in does credit checks so finding a place to live would be impossible which is a HUGE factor for me. 

 

Am I being too optimistic about paying this debt down and over taking a monster that I cannot beat down? 


No you are not being too optimistic. You are doing a fantastic job. Stay the course.

 

As far as the installment loans go, just make the monthly payments.

 

On the revolving credit, absolutely snowball it. Just pay the smallest balance, then the next smallest, and so on. Pay the minimum + $5 on the others.

 

You're going to get there!


I was hoping it wasn't a solution out of reach, I ran numbers on my debt reduction calculator and input for snowballing an extra $100 to my smallest balance first then it gave me an estimation of being debt free by 2026 which also doesn't account for 2nd job wages, random bonuses or extra money I may run into over the course of the years to pile against debt. I guess that's a +1 to staying on course for snowballing? Thanks for the words of motivation!

Message 9 of 27
LawStudentCivilis
Established Contributor

Re: Should I snowball my way out or give up?

OP, here is my advice but please take it with a grain of salt.  I think you can get it down well before 5 years if you are strategic.  I do believe in finances over FICO.  However, in your case getting a higher FICO can greatly help you out with your finances and enable you to tackle the debt much more quickly.

 

Again, this is just my advice.  I like to research, map out, and plan.  I usually do not follow one principle from my research.  I usually pull from multiple places and put my own spin.  So for instance, having all or most of your cards holding a balance hurts your score.  I would ensure to always PIF Amazon Prime to make sure this card maintains a zero balance.  Go ahead and payoff Amex Everyday to add another card with a zero balance. The more cards that can very easily be zeroed out, the better (again in my opinion).

 

Next, I would look at the individual utilization of each card.  I would not pay more than the minimum on the loans just yet since we are trying to quickly increase your FICO to possibly get a 0% BT card.  As you know, you gain points for each utilization threshold on a card: 89%, 69%, 49%, 30%, etc.  I would throw as much money as I could to get Capital One Walmart below the 50% threshold.  I would get it to 49.4%.  Then I would get the larger balances under 89% and if possible get at least one or two of the larger balances at 69.4%.  From there, I would see what increases if any have been made to my FICO score.

 

Seeing you have an established relationship with NFCU I would try to apply for their Platinum 0% BT card after I got the balances a little lower as described above.  Again I would try to "strategically" bring down the revolving debt below individual thresholds.  If you could get all or even half of your revolving debt on a 0% BT card THEN I would create a snowball method as it would free up a lot of your cash flow.

 

Lastly, before you do anything I would request a CLI on all cards IF they are SP.  This could greatly improve your utilization as well.  I would regularly request CLI as you are paying down balances.  In my opinion, what I outlined above would allow you to pay off much quicker than 5 years depending on income.

Message 10 of 27
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