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Started By
Message
Tips for paying off debt?
Posted on 6/24/15 at 9:39 pm
Posted on 6/24/15 at 9:39 pm
I have some debt I'm trying to pay off. I'm trying to use Dave Ramsey's techniques but I'm interested to see if anyone here has any tips.
I have:
about $2,500-$3,000 in credit card debt (three cards total)
Roughly $8k in student loans
I also have a car note and mortgage but I don't necessarily look at those two as "debt" like I do credit cards and student loans.
Any ideas to speed up paying this off? I'm trying to pay a little more than the minimum payment amounts each month.
TIA
I have:
about $2,500-$3,000 in credit card debt (three cards total)
Roughly $8k in student loans
I also have a car note and mortgage but I don't necessarily look at those two as "debt" like I do credit cards and student loans.
Any ideas to speed up paying this off? I'm trying to pay a little more than the minimum payment amounts each month.
TIA
11
Posted on 6/24/15 at 9:41 pm to King of New Orleans
If you're going by DR, then the credit cards first since they are the smallest. I'd also hit them too because the interest is likely the highest. Only thing to do is attack one at a time. Pay the minimum on everything except the CCs until they're paid off. Then take on the student loans.
This post was edited on 6/24/15 at 9:41 pm
Posted on 6/24/15 at 9:41 pm to King of New Orleans
There's no big secret...just pay more than you're paying now
Posted on 6/24/15 at 9:58 pm to King of New Orleans
To pay off the fastest and "feel" better about doing, pay off the smallest balance first, paying the minimum to others, and snowball it. Once the lowest is paid off, put that additional amount towards the next lowest balance, and so on.
To save the most interest, put whatever additional money you can toward the highest interest rate, regardless of balance.
Remember, student loans are very forgiving and tax deductible. Tackle the credit cards first. Don't put any more on that balance until it's paid off.
To save the most interest, put whatever additional money you can toward the highest interest rate, regardless of balance.
Remember, student loans are very forgiving and tax deductible. Tackle the credit cards first. Don't put any more on that balance until it's paid off.
Posted on 6/24/15 at 10:06 pm to LSUtigerME
God tips. Ive put the credit cards away while i pay them off.
Posted on 6/24/15 at 10:43 pm to King of New Orleans
Step 1 - Free up more monthly cash flow. Take a hard look at all of your monthly bills and fixed costs. Cut out any bills or features you can live without, and call to make sure you have the lowest rates on the stuff you want to keep.
Step 2 - Try to be as frugal as possible with daily choices while still enjoying life.
Step 3 - Put extra money towards debt. I have my own opinions on which to pay off first but I think it is more a question of your personality and tendencies.
Step 2 - Try to be as frugal as possible with daily choices while still enjoying life.
Step 3 - Put extra money towards debt. I have my own opinions on which to pay off first but I think it is more a question of your personality and tendencies.
Posted on 6/24/15 at 11:05 pm to iAmBatman
quote:
There's no big secret...just pay more than you're paying now
Yup.
Two things:
1) make more money
2) spend less money
Posted on 6/25/15 at 6:36 am to Bayou Tiger
quote:
Step 1 - Free up more monthly cash flow. Take a hard look at all of your monthly bills and fixed costs. Cut out any bills or features you can live without, and call to make sure you have the lowest rates on the stuff you want to keep.
Step 2 - Try to be as frugal as possible with daily choices while still enjoying life.
Step 3 - Put extra money towards debt. I have my own opinions on which to pay off first but I think it is more a question of your personality and tendencies.
Step 4 - Avoid "shite happens" happening in your life.
Anyone have advice for step 4?
Just a few weeks ago, I was nearly breaking out a cigar with the direction of my debt payoff. I have $9000 in debt total outside of a mortgage. So to start paying that off, I cut the cord, paid off one CC, saved almost $300 on groceries (with a plan that could be repeated and improved each month), saved $700/year with a new insurance company, and outlined a 12 month plan that would end with zero debt (including paying off all car payments) and a surplus of $500.
And not too long after that, my wife's car broke down ($250), my rental property's dishwasher broke ($500), my dog got a severe ear infection ($150), my windshield on my car cracked ($?), my father forgot to include taxes and fees in the hotel costs for a vacation next week ($70 more than budgeted), and my rental property's termite renewal bill came in the mail ($170).
Termite bill was my fault. The rest was "shite happens." I'm now about $1000 behind schedule.
I've read from many sources that paying off debt is more important than savings, but I can't help but think that paying the minimums for a while and establishing an emergency fund would benefit me more.
Posted on 6/25/15 at 7:13 am to StringedInstruments
quote:
I've read from many sources that paying off debt is more important than savings, but I can't help but think that paying the minimums for a while and establishing an emergency fund would benefit me more.
Do you have anything you can borrow against in a dire time of need such as a 401k, home equity or something similar? Also keep in mind if you lose your job, you'd qualify for unemployment.
There are lot of things to consider when trying to determine the priority of the emergency fund. Good luck.
Posted on 6/25/15 at 7:36 am to StringedInstruments
quote:
I can't help but think that paying the minimums for a while and establishing an emergency fund would benefit me more.
If you have credit card debt this is absolutely false. Pay down the cards as aggressively as possible. If "shite happens" you can charge it back up if you have to.
Another thing to consider is that if you have a history of paying on time, call your card issuers and ask for a rate reduction. It doesn't hurt to ask and they might do it.
Posted on 6/25/15 at 7:54 am to StringedInstruments
quote:
I've read from many sources that paying off debt is more important than savings, but I can't help but think that paying the minimums for a while and establishing an emergency fund would benefit me more.
I listen to Dave Ramsey daily, but I've got to think that his $1,000 emergency fund is quite outdated.
1k might have gotten you by in 1998 but I'd say $2,500 is more appropriate now before one attacks debt.
This post was edited on 6/25/15 at 8:00 am
Posted on 6/25/15 at 7:59 am to bayoubengals88
5000 plus. New AC for a homeowner and one is back on the road to poor.
Posted on 6/25/15 at 8:07 am to notsince98
quote:
There are lot of things to consider when trying to determine the priority of the emergency fund. Good luck.
Good points. I hear that question all the time :"what if you lose your job?".
I am amazed at how many people assume we are incapable of cutting grass, painting homes, etc.
Posted on 6/25/15 at 8:07 am to bayoubengals88
quote:
1k might have gotten you by in 1998 but I'd say $2,500 is more appropriate now before one attacks debt.
Why? What is that cash doing for you that you couldn't do with a CC if you ran in to an emergency?
Posted on 6/25/15 at 8:14 am to LSUAfro
quote:
Why? What is that cash doing for you that you couldn't do with a CC if you ran in to an emergency?
Earn interest instead of costing you much more in interest.
Posted on 6/25/15 at 8:23 am to LSUAfro
quote:That cash is taking care of the issue/problem. Putting it on a credit card is delaying and enlarging that problem. Am I wrong?
Why? What is that cash doing for you that you couldn't do with a CC if you ran in to an emergency?
This post was edited on 6/25/15 at 8:24 am
Posted on 6/25/15 at 8:33 am to notsince98
quote:I'm not sure I follow. Where are you earning interest?
Earn interest instead of costing you much more in interest.
quote:
That cash is taking care of the issue/problem. Putting it on a credit card is delaying and enlarging that problem. Am I wrong?
I don't follow this either. If you're truly committed to paying off the CC, it would make sense to save yourself hundreds of dollars in interest by applying that $2,500 towards the debt. If you pay down that CC with the $2,500 and look at that newly available credit as more spending ability, then you're F'ed either way. It's just a matter of when.
This post was edited on 6/25/15 at 8:34 am
Posted on 6/25/15 at 8:39 am to King of New Orleans
Step 1 - Create a payment plan:
Plan to pay off your credit card debt first as others have said. If you wish to pay the least amount of money overall go in this order:
1) Pay off credit card with highest interest rate, and proceed to next highest rate until debt is gone.
2) Pay off student loan with the highest interest rate. Rinse and repeat.
This is the order I would take, but the alternative is to knock out the credit card debt with the lowest balance. In that case you could free up extra money faster to pay towards the next debt. Credit card should be tackled first primarily due to it usually being a higher interest rate and it does not offer the tax benefits that student loan interest does.
Step 2 - Create a budget (probably should be Step 1):
As for preparing yourself to make the next step from living in debt to sitting on a comfortable amount of savings, begin to reevaluate all of your monthly expenditures. Creating a budget, logging expenses, and having the ability to analyze them at the end of the day really can help you excel from living in debt to building emergency savings. Things will begin to click such as paying bills on time, and not feeling guilty when you splurge on a nice meal from time to time. Another thing is to reduce any fees you might be getting charged by your utilities. Are you doing paperless billing? Have you set up auto-pay? Some companies reward you for choosing these options.
Step 3 - Break out the credit cards:
Now that you are debt free, make sure you use your credit cards to work for you. Get a rewards card (at least a cash back rewards card) that accrues rewards for each purchase. You will continue to improve your credit, all the while you are collecting rewards. And research the benefits of your card. Several institutions will offer purchase protection amongst other things when you use their card to make a purchase. Credit cards can be a good thing, but you need to be in a position to pay your statement every month before fully utilizing their benefits.
Plan to pay off your credit card debt first as others have said. If you wish to pay the least amount of money overall go in this order:
1) Pay off credit card with highest interest rate, and proceed to next highest rate until debt is gone.
2) Pay off student loan with the highest interest rate. Rinse and repeat.
This is the order I would take, but the alternative is to knock out the credit card debt with the lowest balance. In that case you could free up extra money faster to pay towards the next debt. Credit card should be tackled first primarily due to it usually being a higher interest rate and it does not offer the tax benefits that student loan interest does.
Step 2 - Create a budget (probably should be Step 1):
As for preparing yourself to make the next step from living in debt to sitting on a comfortable amount of savings, begin to reevaluate all of your monthly expenditures. Creating a budget, logging expenses, and having the ability to analyze them at the end of the day really can help you excel from living in debt to building emergency savings. Things will begin to click such as paying bills on time, and not feeling guilty when you splurge on a nice meal from time to time. Another thing is to reduce any fees you might be getting charged by your utilities. Are you doing paperless billing? Have you set up auto-pay? Some companies reward you for choosing these options.
Step 3 - Break out the credit cards:
Now that you are debt free, make sure you use your credit cards to work for you. Get a rewards card (at least a cash back rewards card) that accrues rewards for each purchase. You will continue to improve your credit, all the while you are collecting rewards. And research the benefits of your card. Several institutions will offer purchase protection amongst other things when you use their card to make a purchase. Credit cards can be a good thing, but you need to be in a position to pay your statement every month before fully utilizing their benefits.
Posted on 6/25/15 at 8:39 am to King of New Orleans
The best thing you can do is strip 90% of all your "wants" out of your monthly expenses. It will be hard as hell the first two or three months but after that it will become second nature to you. Before you know it, you will have made very significant progress using all that extra money each month. My brother is in a similar situation as yours and he refuses to give himself $500 a month to spend any way he wants. He doesn't believe he can do it. My wife and I live off of only $300 a month as "fun money" and everything else goes to paying off debt.
Once you make it a habit, it transitions from a hardship to necessity because you see the progress you make.
Do this and I guarantee you will be astonished at how you ever lived any other way before. Good luck!
Once you make it a habit, it transitions from a hardship to necessity because you see the progress you make.
Do this and I guarantee you will be astonished at how you ever lived any other way before. Good luck!
Posted on 6/25/15 at 9:04 am to LSUAfro
I see what you're saying now. Don't even establish the e fund to begin with...just put it all on the cc.
Maybe it's just psychological.
Maybe it's just psychological.
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