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financially wrecked - please advise my best moves

iowe
Regular Contributor

financially wrecked - please advise my best moves

 

It's been a while since I was last active here. I've been through divorce including a child custody battle in the last three years. Had to swipe my cards to pay legal fees because I didn't have enough liquid cash. It's been hell, but I'm glad I was able to pay for it in some way so that I could see my kid. There was a time when I wouldn't have had the ability to fight for time with my little one. Only silver lining there is that I'm grateful I at least had credit to use, in large part thanks to this forum from several years ago, so that my little one is with her dad for an equal amount of time. 

 

What I need now is advice on a solid plan of action to pay off my debt in the healthiest, score boosting/maintaining way with the stats that I currently have. My debt to income is upside down. Help me get back to right side up the best way possible please. What are my best moves? 

 

Income from two jobs:  52k 

 

Installment loan (auto loan) :  payoff $6610.01 -  monthly payment $510.53   2.5% interest rate

Installment loan (student loans) :  29k - monthly payment is currently in forbearance not gaining interest 

 

Revolving balances: 

NFCU Cash Rewards apr 10.25%   $ 20,841 / 24000 limit  $421 min payment 

Discover apr 18.25%                         $    9756 / 18,000 limit  $ 298 min payment

Snyc/Amazon Prime  apr 22%         $   3634  / 6000 limit   $118 min payment

Pentagon FCU   apr  19%                  $    3022 / 10000 limit  $60 min payment 

Capital One QS apr 22.90%               $    2932 / 4000 limit    $87 min payment 

 

Revolving debt total ~ 40k   Monthly min payment total ~ $960 

I have about an extra $600 per month to snowball with, on top of my minimum payments that I've been throwing at my lower balance cards. I've knocked out two of them so far. 

Total debt including Installment & revolving ~ 70k 

 

Vantagescore Experian, Transunion, & Equifax are all 677 

Fico 8 Experian is 697, I don't know the other fico 8's 

 

Very clean on all reports, just debt heavy 

No late payments

No collections

No derogs

No new accounts 

AAoA is 6 years 2 months

 

Only soft pulls but I checked my rates for a personal loans from two lenders to consolidate some revolvers.

Penfed preapproved for 11.25% on 20000   

Discover Personal Loan  prequalified for 18.99%  on 30000

 

Would I be better off snowballing or avalanching, or consolidating some of these credit card debts? Should I try for another credit card with an interest free balance transfer offer and move the higher interest card debts to it?? If so, which one should I look into?

I do not own a home so HELOC is not an option. 

Do I throw my extra money at that auto loan to pay it off first and free up that extra $510 a month? Even though my interest rate on that loan is 2.5%? Would it be wise? Once that loan is paid, I can also lower my auto insurance coverage to a lower amount and save another $80 on top of that monthly truck note being finished. 

 

Give me some advice. I'm trying to get into a mortgage for me and my little girl as soon as I get out of this. I'm a professional firefighter and a military veteran. I have my VA loan certificate in hand for the day that I can afford to purchase a home. 

 

 

 

 

 

 

 

 

 

Starting Score: 564
Current Score: 729
Goal Score: 850 by 1/2024


Take the MyFico Challenge 2021

Gardening until forever.
Message 1 of 29
28 REPLIES 28
GApeachy
Super Contributor

Re: financially wrecked - please advise my best moves

I'm not giving advice but wondering if......Other's will chime in as to whether my thoughts are outlandish or not.Smiley Tongue

 

Thoughts:

Would making two pymts./month on these high int. credit cards knock down the interest a little and saving a few dollars in monthly interest on those cards?  The payment would still total the same monthly amt. but divided by 2.  (Thought #1)  One partial pymt. early in the cycle and the second pymt. on or just before it's due date.  

 

Also, wouldn't applying for anymore credit put OP at higher risk of AA by spooking current creditors? (cld's, closure(s), balance chasing?)...(Thought #2)  ....perhaps those double pymts. could/would help stave off AA with enough time to get the %'s down across the board...forgot...  (edit) plus throwing extra at them as OP mentioned there was some extra $ to apply somewhere.

 

Idk but glad you are current!

"My Take Home Pay Don't Take Me Home"
Message 2 of 29
iowe
Regular Contributor

Re: financially wrecked - please advise my best moves

Thanks, yeah It took me several years to get to a totally clean report. I have to protect that now. I don't have any room at all to take on any more credit card debt or I'm going to be past the point of no return.  

Starting Score: 564
Current Score: 729
Goal Score: 850 by 1/2024


Take the MyFico Challenge 2021

Gardening until forever.
Message 3 of 29
ghgirll40
Valued Member

Re: financially wrecked - please advise my best moves


@iowe wrote:

 

It's been a while since I was last active here. I've been through divorce including a child custody battle in the last three years. Had to swipe my cards to pay legal fees because I didn't have enough liquid cash. It's been hell, but I'm glad I was able to pay for it in some way so that I could see my kid. There was a time when I wouldn't have had the ability to fight for time with my little one. Only silver lining there is that I'm grateful I at least had credit to use, in large part thanks to this forum from several years ago, so that my little one is with her dad for an equal amount of time. 

 

What I need now is advice on a solid plan of action to pay off my debt in the healthiest, score boosting/maintaining way with the stats that I currently have. My debt to income is upside down. Help me get back to right side up the best way possible please. What are my best moves? 

 

Income from two jobs:  52k 

 

Installment loan (auto loan) :  payoff $6610.01 -  monthly payment $510.53   2.5% interest rate

Installment loan (student loans) :  29k - monthly payment is currently in forbearance not gaining interest 

 

Revolving balances: 

NFCU Cash Rewards apr 10.25%   $ 20,841 / 24000 limit  $421 min payment 

Discover apr 18.25%                         $    9756 / 18,000 limit  $ 298 min payment

Snyc/Amazon Prime  apr 22%         $   3634  / 6000 limit   $118 min payment

Pentagon FCU   apr  19%                  $    3022 / 10000 limit  $60 min payment 

Capital One QS apr 22.90%               $    2932 / 4000 limit    $87 min payment 

 

Revolving debt total ~ 40k   Monthly min payment total ~ $960 

I have about an extra $600 per month to snowball with, on top of my minimum payments that I've been throwing at my lower balance cards. I've knocked out two of them so far. 

Total debt including Installment & revolving ~ 70k 

 

Vantagescore Experian, Transunion, & Equifax are all 677 

Fico 8 Experian is 697, I don't know the other fico 8's 

 

Very clean on all reports, just debt heavy 

No late payments

No collections

No derogs

No new accounts 

AAoA is 6 years 2 months

 

Only soft pulls but I checked my rates for a personal loans from two lenders to consolidate some revolvers.

Penfed preapproved for 11.25% on 20000   

Discover Personal Loan  prequalified for 18.99%  on 30000

 

Would I be better off snowballing or avalanching, or consolidating some of these credit card debts? Should I try for another credit card with an interest free balance transfer offer and move the higher interest card debts to it?? If so, which one should I look into?

I do not own a home so HELOC is not an option. 

Do I throw my extra money at that auto loan to pay it off first and free up that extra $510 a month? Even though my interest rate on that loan is 2.5%? Would it be wise? Once that loan is paid, I can also lower my auto insurance coverage to a lower amount and save another $80 on top of that monthly truck note being finished. 

 

Give me some advice. I'm trying to get into a mortgage for me and my little girl as soon as I get out of this. I'm a professional firefighter and a military veteran. I have my VA loan certificate in hand for the day that I can afford to purchase a home. 

 

 

 

 

 

 

 

 

 


If I was you I would take that 11 percent personal loan and consolidate as much of the revolver debt as I could then attack the auto loan with a vengeance while making minimums on the NFCU card and the PL until you can get the auto loan paid off. That will free up 510 a month to throw at the PL loan and then attack that with a vengeance and once thats paid off attack the NFCU card with a vengeance. Then you will have the student loan last to attack. I would not buy a home til you clean up all this debt or else you will just be creating more financial stress and potential pitfalls. This is my advice that I am following only after struggling as a single mom for 12 years. Your daughter and you will have a great bond and relationship no matter where you lay your head. Stress free and debt free will create a legacy for her future and yours. Best wishes!

EX 714 TU 717 EQ 732
NFCU Cash Rewards Signature Visa|Golden 1 Platinum Rewards Signature Visa|Golden 1 CU Personal Loan|Lending Point Personal Loan
Message 4 of 29
SlideOrInsert
Regular Contributor

Re: financially wrecked - please advise my best moves

I would start by applying that extra $600/mo to the auto loan. at $1100/mo, pay it off in six months just for simplicity and assuming its a necessity.

 

after that I would use that extra $1100 per month and avalanche the credit cards. in theory you could have the auto, capital one, and amazon paid off in a year. pentagon and discover in year two. then finally nfcu. avalanche vs snowball are almost the same in this situation.

 apr %balancelimitmin pmtint $util %
Capital One QS22.9029324000875673
Snyc Amazon Prime22.00363460001186761
Pentagon FCU19.00302210000604830
Discover18.2597561800029814854
NFCU Cash Rewards10.25208412400042117887
TOTAL14.84401856200098449765

 

the rough math on something like this is $8400+ in cumulative interest over about 36 months with $1584 in monthly payments ($984 minimums + $600 extra).

 

--- OR ---

 

if you are confident in penfeds pre-approval AND that you will not run the credit cards up again, you can take that $20000 personal loan and consolidate all cards except nfcu. the blended apr on those four cards is 19.78%. you will save money on interest, however, depending on the length of term you could end up with a slightly higher payment than the current minimums.

 apr %balancelimitmin pmtint $util %
Capital One QS22.9029324000875673
Snyc Amazon Prime22.00363460001186761
Pentagon FCU19.00302210000604830
Discover18.2597561800029814854
TOTAL19.781934438000563319 

 

 apr %termamountpmt
36 month loan11.253620000-657
48 month loan11.254820000-519

 

 apr %balancelimitmin pmtint $util %
Capital One QS22.9004000000
Snyc Amazon Prime22.0006000000
Pentagon FCU19.00010000000
Discover18.25018000000
NFCU Cash Rewards10.25201852400042117284
36 month loan11.252000020000657188100
TOTAL10.7540185820001078360 

 

the rough math on something like this is $5800 in cumulative interest over about 30 months with $1584 in monthly payments.

 

forget about the discover loan because 1) from my experience they do not allow one to apply the loan towards any discover debt and 2) I don't love the rate.

 

I have no experience with student loans, so for now I would say leave that for last. worst case scenario some of that extra $600/mo could be used toward payments.

 

chase
$8900
discover
$20000
citi
$21000
bofa
$30000
nfcu
$30000
nfcu
$20000
Message 5 of 29
SouthJamaica
Mega Contributor

Re: financially wrecked - please advise my best moves


@iowe wrote:

 

It's been a while since I was last active here. I've been through divorce including a child custody battle in the last three years. Had to swipe my cards to pay legal fees because I didn't have enough liquid cash. It's been hell, but I'm glad I was able to pay for it in some way so that I could see my kid. There was a time when I wouldn't have had the ability to fight for time with my little one. Only silver lining there is that I'm grateful I at least had credit to use, in large part thanks to this forum from several years ago, so that my little one is with her dad for an equal amount of time. 

 

What I need now is advice on a solid plan of action to pay off my debt in the healthiest, score boosting/maintaining way with the stats that I currently have. My debt to income is upside down. Help me get back to right side up the best way possible please. What are my best moves? 

 

Income from two jobs:  52k 

 

Installment loan (auto loan) :  payoff $6610.01 -  monthly payment $510.53   2.5% interest rate

Installment loan (student loans) :  29k - monthly payment is currently in forbearance not gaining interest 

 

Revolving balances: 

NFCU Cash Rewards apr 10.25%   $ 20,841 / 24000 limit  $421 min payment 

Discover apr 18.25%                         $    9756 / 18,000 limit  $ 298 min payment

Snyc/Amazon Prime  apr 22%         $   3634  / 6000 limit   $118 min payment

Pentagon FCU   apr  19%                  $    3022 / 10000 limit  $60 min payment 

Capital One QS apr 22.90%               $    2932 / 4000 limit    $87 min payment 

 

Revolving debt total ~ 40k   Monthly min payment total ~ $960 

I have about an extra $600 per month to snowball with, on top of my minimum payments that I've been throwing at my lower balance cards. I've knocked out two of them so far. 

Total debt including Installment & revolving ~ 70k 

 

Vantagescore Experian, Transunion, & Equifax are all 677 

Fico 8 Experian is 697, I don't know the other fico 8's 

 

Very clean on all reports, just debt heavy 

No late payments

No collections

No derogs

No new accounts 

AAoA is 6 years 2 months

 

Only soft pulls but I checked my rates for a personal loans from two lenders to consolidate some revolvers.

Penfed preapproved for 11.25% on 20000   

Discover Personal Loan  prequalified for 18.99%  on 30000

 

Would I be better off snowballing or avalanching, or consolidating some of these credit card debts? Should I try for another credit card with an interest free balance transfer offer and move the higher interest card debts to it?? If so, which one should I look into?

I do not own a home so HELOC is not an option. 

Do I throw my extra money at that auto loan to pay it off first and free up that extra $510 a month? Even though my interest rate on that loan is 2.5%? Would it be wise? Once that loan is paid, I can also lower my auto insurance coverage to a lower amount and save another $80 on top of that monthly truck note being finished. 

 

Give me some advice. I'm trying to get into a mortgage for me and my little girl as soon as I get out of this. I'm a professional firefighter and a military veteran. I have my VA loan certificate in hand for the day that I can afford to purchase a home. 

 


1. If your goal is just to get out of debt, then I would just snowball.

 

2. If your goal is to get in the best possible shape for mortgage approval, I would take out the 11.25% loan and use the 20k as follows:

 

- 9,000 NFCU Cash Rewards

- 3,634 Sync/Amazon Prime

- 3,022 PenFed card

- 2,932 Capital One QS

- 1,412 Discover

 

Getting NFCU below 50% and zeroing out 3 other accounts will give your mortgage scores a nice boost.

 

Don't waste any of it on your installment loans; that won't help your scores at all.


Total revolving limits 699000 (597000 reporting) FICO 8: EQ 732 TU 721 EX 698

Message 6 of 29
MarkintheHV
Regular Contributor

Re: financially wrecked - please advise my best moves

If it were me, I would take the loan from PenFed and snowball from the ground up.  Keep the Penfed credit card in your pocket for incidentals (make sure it gets paid every month) and sock drawer the rest.  Put the 20k from Penfed as follows:

 

NFCU Cash Rewards         20,841
Discover                               9756 (Pay 3802, remaining balance is 5954)
Car                                        6610 (Payoff) (I say pay off the car as that will free up $510/mo to go after the credit cards)
Snyc/Amazon                     3634 (Payoff)
Pentagon FCU                     3022 (Payoff)
Capital One                          2932 (Payoff)

 

Now you have $775 plus the current minimum  to attack the remaining Discover and NFCU. I didnt add the $600 that you said you had for snowball since the 20K from Penfed will need to be paid....whatever you have left from that payment, put it towards Discover.  Discover should be paid off in 7-8 months (rough estimate), thus giving you an additional $1073 to put towards NFCU in addition to the $481 you are already paying.

This should put your credit card debt to 0 in about 24 months. Forget about the mortage right now, (take the savings from having no credit card payments and put it towards down payment or wipe out the Penfed loan (thats what I did)) the scores will fix themselves once you pay off balances.  Once you pay off the max you can pay off with your 20k, your scores are going to take a big jump. I was 30K in the hole last year, did the loan to pay them off, and I got huge jumps in my scores.

 

Make sure after you get through this that you pay off your credit cards each month.  I personally use AZEO, and that balance is paid each month so my cash rewards go into my savings account instead of towards interest rates.  It's a great feeling to have all that high interest credit card debt gone.

 

Good Luck!

Wallet: BoA CCR MC - $45k | NFCU Flagship - $41k | Amex BCP - $45k
Sock Drawer: X1 - $35k | REI MC - $22k | Amazon Visa - $10k

Hangin out in the garden...
Message 7 of 29
iowe
Regular Contributor

Re: financially wrecked - please advise my best moves

Thank you for your time drawing that gameplan up. Smiley HappyThat's basically what I was considering. My objective is to get the hell out of the debt moreso than get into a mortgage, the mortgage is just my secondary objective. I'm just trying to accomplish this as smartly as I can with the options I have. With my relatively low income, I have to be debt free essentially to get approved and realistically afford a decent home and still be able to purchase essential things.  

Just for the sake of knowing, say I opt not to get the Penfed loan and go at it all with snowballing from the ground up. Would you start with the lowest balance card first, or would you start by paying the auto loan off first and then go after the cards? 

Starting Score: 564
Current Score: 729
Goal Score: 850 by 1/2024


Take the MyFico Challenge 2021

Gardening until forever.
Message 8 of 29
Anonymalous
Established Contributor

Re: financially wrecked - please advise my best moves

The auto loan is 2.5% and secured (so the lender is less likely to worry), so I wouldn't even consider paying it off first. But that's me.

 

The main reason to snowball is psychological -- by paying off the small debts first, you get a sense of accomplishment. But from a purely financial standpoint, it makes the most sense to first go after the debt with the highest APR. If you don't need that emotional bump from paying down small debt, then hit the high APR credit card debit first. But if you think that bump would help, or even if you're on the fence, the snowball method is often the best approach. Because while you'll end up paying more money, it won't be that significant as long as you pay it all down in a reasonable time frame.

 

And the way to pay it all down is to come up with a plan, and stick to it. And sticking to it is often the most difficult part. If you already have a good sense of your finances and frugal habits, it might not be a problem. But if you need to develop those habits, or even if you're not completely sure, positive reinforcement at the start can help ensure you stay the course. This is a decision you'll have to make, because you know yourself best.

 

Message 9 of 29
iowe
Regular Contributor

Re: financially wrecked - please advise my best moves

Thanks for the advice. 
My higher interest rate cards are essentially the same cards with the smallest balances. So, I would pay them off in the same order whether going for smallest balance first or higher APR first. 
I should've added earlier, I went to the apps and either froze all my cards or deactivated them. I've been living cash only for the last month. I recently paid a couple of other low balance cards off just to get some low hanging fruit first. I have the discipline to stay the course as far as card payoffs. 
I'm mulling over paying the auto loan off or not, to free up the

extra cash sooner to throw at the cards. Potato potahto, tomato tomahto. 
Wondering if it would save me time or money to get debt free by paying that auto loan off now or to let it finish out as currently scheduled, which would be about 13 months I believe. 

Starting Score: 564
Current Score: 729
Goal Score: 850 by 1/2024


Take the MyFico Challenge 2021

Gardening until forever.
Message 10 of 29
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