@marty56 wrote:
The only thing I would add is that you might want to protect your oldest and or best account by reducing its balance to protect your from AA.
IMHO with that much CC debt, I would focus on getting out of debt as your main goal so Imight cosider using the Debt Snowball approach in which you make minimum payments on all accounts except the one with the smallest balance and attack that one till its PIF. Then attack the next smallest balance and so on. This mehtod is also FICO score friendly as well and provides motivation as ach account is PIF.
I agree with other replies that with those balances your first priority should be reducing your debt load; FICO scores are not as important as your overall financial health and carrying such balances is not good. As for how to pay them down, I suggest you start by writing down every cent you have spent in the past two years (as best you can estimate). Sort your expenses from highest to lowest, and focus on the biggest ones first because there is where cutting expenses will have the most impact. Do not forget what I call the UN-surprises such as car repairs. My 2000 Camry is old enough that from time to time it needs fairly expensive repairs; I cannot tell you when the next such repair will be needed but I would be very surprised if in 2010 I end up spending less on that car than I spent on it in 2009 (and of course one or two major mechanical jobs per year cost a lot less than a new car would cost!). So in every month when my Camry does NOT need fixing, I had better be saving at least one twelfth of what I spent on car maintenance in 2009. I think a lot of people run up debts over time because they don't allow for the UN-surprises in their budgets and therefore must borrow to cover such things when they happen. Same goes for your residence if you own it: every year my condo needs some things fixed so I must allow for that in my budget.
As for where to put money you cut from your budget, there are two main schools of thought. One view is the "debt snowball" where you start with your smallest balance first, so you get the psychological impact from paying something off quickly and this helps you keep going. The other view is you first pay off whichever account has the highest interest rate because that maximizes the saving of interest and therefore your dollars go farther, but this may require a little more self-discipline. Another consideration of course is which accounts have the highest utilization as a percentage of the credit limit: these days issuers get nervous when an account uses too much of its limit so you might need to focus on whichever accounts are closest to their limits.
Myself, I have never carried much credit card debt, but in years past before we had built up the savings cushion we have now my wife and I sometimes did have to carry a moderate balance. What I did at that time was each month first pay all the bills where I had no choice about how much to pay. Then I would take the remaining available dollars and divide by my total revolving balance and pay that percentage of each balance. But that approach only works if no single account is very close to its limit and the overall total is not too large.
"Discipline is remembering what you really want"
Message Edited by MattH on 01-07-2010 02:29 AM
TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
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