Strategies for Debt Paydown/Management Requested

[Anne1208]

My husband and I have a couple car loans, a personal loan and one large credit card balance that we are paying off with a life insurance policy.  So, my score right now is 687 with the one bad mark being the high revolving credit utilization.

After those are paid, I have $7000 left and I have the following debts:

• A store credit card that I am on a 0% interest, two year paydown plan on a larger purchase ($2000).
• A Discover IT Card at 23.45% interest, $8000 limit, $7000 balance.
• A Bank of America Visa at 25.75% interest, $8000 limit, $7000 balance.
• A personal loan through Prosper for $13,000 at 16.84%

I have the following TENTATIVE plan but I'd like to see if anyone has any reactions or better ideas for me:

• A store credit card that I am on a 0% interest, two year paydown plan on a larger purchase ($2000). PLAN: pay as-is for now.
• A Discover IT Card at 23.45% interest, $8000 limit, $7000 balance. PLAN: pay off completely, and then at $0 balance, this will make me eligible for Discover IT card's 0% interest 18 month balance transfer (5% transfer fee).
• A Bank of America Visa at 25.75% interest, $8000 limit, $7000 balance. Transfer this balance to Discover with the balance transfer benefit, pay off in 18 months at $408/month.
• A personal loan through Prosper for $13,000 at 16.84%: All of the other debts my husband and I are paying off as mentioned above are through our local credit union, so we will soon have zero debt through them except our house mortgage. My thought was to wait for my score to go up over about 6 months or so, and then apply for an unsecured loan through them to payoff this Prosper loan.  The last time my husband and I got an unsecured loan through the credit union with a 700+ credit score, the rate was like, 11 or 12%.

So, that is my plan....any other suggestions or tweaks or ideas are welcome!!!!!!!!!

[Anonymous]

Definitely pay the 0% where it stands for now.

The one thing that I think might be tricky with your plan of ultimately refinancing the Prosper loan is that you will still have a credit card utilizing $7,000 out of an $8000 limit for 87% utilization. This is going to considerably hold your scores back.

I'd almost consider throwing $3500 at each of your $7k/$8k cards. Let it report (along with everything else you've just paid off) and then try to get the personal loan. You won't need to wait six months . . just until everything reports (a month or less)

Once the personal loan is secured, you could deal with the two $3500 balances either by balance transferring to 0% OR just using your monthly personal loan payment savings to hammer on them and get them gone ASAP. I'd probably do the latter. 

[Revelate]

I know there are lots of people that will disagree with me on this, but you could shortcut basically all of this with a HELOC if you have equity in your house.

Outside of that I think  your plan is smart, I do like it.

[Anonymous]

Dont forget to hold some $$$ for real emergencies when thinking paydown. Its ok to have 24% APR versus having to borrow should an emergency arise.

Secure some cash for daily expenses & then paydown debts. I learned the very hard way of having no available cash but paid down credit card debt.

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@Anne1208 wrote:

My husband and I have a couple car loans, a personal loan and one large credit card balance that we are paying off with a life insurance policy.  So, my score right now is 687 with the one bad mark being the high revolving credit utilization.

After those are paid, I have $7000 left and I have the following debts:

• A store credit card that I am on a 0% interest, two year paydown plan on a larger purchase ($2000).
• A Discover IT Card at 23.45% interest, $8000 limit, $7000 balance.
• A Bank of America Visa at 25.75% interest, $8000 limit, $7000 balance.
• A personal loan through Prosper for $13,000 at 16.84%

I have the following TENTATIVE plan but I'd like to see if anyone has any reactions or better ideas for me:

• A store credit card that I am on a 0% interest, two year paydown plan on a larger purchase ($2000). PLAN: pay as-is for now.
• A Discover IT Card at 23.45% interest, $8000 limit, $7000 balance. PLAN: pay off completely, and then at $0 balance, this will make me eligible for Discover IT card's 0% interest 18 month balance transfer (5% transfer fee).
• A Bank of America Visa at 25.75% interest, $8000 limit, $7000 balance. Transfer this balance to Discover with the balance transfer benefit, pay off in 18 months at $408/month.
• A personal loan through Prosper for $13,000 at 16.84%: All of the other debts my husband and I are paying off as mentioned above are through our local credit union, so we will soon have zero debt through them except our house mortgage. My thought was to wait for my score to go up over about 6 months or so, and then apply for an unsecured loan through them to payoff this Prosper loan.  The last time my husband and I got an unsecured loan through the credit union with a 700+ credit score, the rate was like, 11 or 12%.

So, that is my plan....any other suggestions or tweaks or ideas are welcome!!!!!!!!!

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[iced]

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@Anne1208 wrote:

My husband and I have a couple car loans, a personal loan and one large credit card balance that we are paying off with a life insurance policy.  So, my score right now is 687 with the one bad mark being the high revolving credit utilization.

After those are paid, I have $7000 left and I have the following debts:

• A store credit card that I am on a 0% interest, two year paydown plan on a larger purchase ($2000).
• A Discover IT Card at 23.45% interest, $8000 limit, $7000 balance.
• A Bank of America Visa at 25.75% interest, $8000 limit, $7000 balance.
• A personal loan through Prosper for $13,000 at 16.84%

I have the following TENTATIVE plan but I'd like to see if anyone has any reactions or better ideas for me:

• A store credit card that I am on a 0% interest, two year paydown plan on a larger purchase ($2000). PLAN: pay as-is for now.
• A Discover IT Card at 23.45% interest, $8000 limit, $7000 balance. PLAN: pay off completely, and then at $0 balance, this will make me eligible for Discover IT card's 0% interest 18 month balance transfer (5% transfer fee).
• A Bank of America Visa at 25.75% interest, $8000 limit, $7000 balance. Transfer this balance to Discover with the balance transfer benefit, pay off in 18 months at $408/month.
• A personal loan through Prosper for $13,000 at 16.84%: All of the other debts my husband and I are paying off as mentioned above are through our local credit union, so we will soon have zero debt through them except our house mortgage. My thought was to wait for my score to go up over about 6 months or so, and then apply for an unsecured loan through them to payoff this Prosper loan.  The last time my husband and I got an unsecured loan through the credit union with a 700+ credit score, the rate was like, 11 or 12%.

So, that is my plan....any other suggestions or tweaks or ideas are welcome!!!!!!!!!

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Why would you pay off a balance at 23% so you can then transfer an equivalent 25% balance over with a 5% fee when you could just pay the 25% balance off in the first place? Edit: re-read; if you know you'll pay it off in 18 months or less your plan will work since, even with the 5% fee, you'll pay less interest in the end. If you don't pay it off in time, depending on how much you did clear out in time you may end up paying more in the long-run for the BT.

That aside, my suggestion is to knock out the BoA debt first as it's highest interest. It'll save you the most in the long-run.

[Revelate]

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@Anonymous wrote:

Dont forget to hold some $$$ for real emergencies when thinking paydown. Its ok to have 24% APR versus having to borrow should an emergency arise.

Secure some cash for daily expenses & then paydown debts. I learned the very hard way of having no available cash but paid down credit card debt.

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May I ask what emergency you had that you couldn't use a credit card for?

[dragontears]

Are the car loans you are planning on paying off at a higher interest rate than the credit cards that will not get paid off with the chunk of money you are getting?

[Anonymous]

@Revelate

It was a Medical emergency wherein i did not have the proper insurance & had i not had emergency $$$ with me I'd be in big doodoo especially when that emergency happens outside US.

My debts would stay the same, however, knowing i could pay for it in an emergency in CASH was indeed very relieving.