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Need advice on paying off debt
Posted on 10/8/17 at 12:02 pm
Posted on 10/8/17 at 12:02 pm
I just paid off my truck. I would like to put my truck payments toward my wife's car. If I do this, I will have it paid off within the next year.
Once completing that, I'd put THAT payment toward credit cards, then onto medical bills.
I am trying to follow Dave Ramseys debt snowball but it seems like I can make quicker progress if I pay the car off first. Am I losing it?
With interest rates, I'm probably backward in my thinking and should pay off the cards first, right?
Also, with cards, I have 4. I'm big with numbers and like to see how long it'll take to pay them off depending on what I pay each month. Is it better to take said amount and sit it up between the cards or put all of said payment toward one card at a time?
FWIW, the car note is about the same as the cards. Both roughly $6,000.
Any help is appreciated.
Once completing that, I'd put THAT payment toward credit cards, then onto medical bills.
I am trying to follow Dave Ramseys debt snowball but it seems like I can make quicker progress if I pay the car off first. Am I losing it?
With interest rates, I'm probably backward in my thinking and should pay off the cards first, right?
Also, with cards, I have 4. I'm big with numbers and like to see how long it'll take to pay them off depending on what I pay each month. Is it better to take said amount and sit it up between the cards or put all of said payment toward one card at a time?
FWIW, the car note is about the same as the cards. Both roughly $6,000.
Any help is appreciated.
This post was edited on 10/8/17 at 12:05 pm
10
Posted on 10/8/17 at 12:14 pm to King of New Orleans
Pay the credit cards off first to avoid accrued interest on the debt. The vehicles are simple interest, which means a fixed amount added to the cost of the vehicle.
Take card with the highest rate and knock it out.
Take card with the highest rate and knock it out.
This post was edited on 10/8/17 at 12:15 pm
Posted on 10/8/17 at 12:18 pm to King of New Orleans
I've never followed the Ramsey system but I have heard him on the radio. When I paid off all my college aged decisions I did it highest interest rates first. I focused on one at a time to achieve milestones but not smallest to largest. I believe Ramsey's approach is also around hitting milestones(small goals) so that you feel like you're achieving. Smallest to largest is effective because you can pay off smaller items faster and therefore have an early sense of winning to get in a rhythm. I think Ramsey targets what he believes is effective for the most people on average.
Personally, If I'm you, I do whatever keeps you motivated to pay down your debts and get you living comfortably.
Personally, If I'm you, I do whatever keeps you motivated to pay down your debts and get you living comfortably.
Posted on 10/8/17 at 1:17 pm to King of New Orleans
Like wee ice mon says, you need to do some investigating into interest rates. You basically want to just pay the highest rate debt off first. I would imagine the cards are higher rates than the vehicle, especially if you bought the vehicle new.
Good luck, being debt free is powerful, I commend you for making it your goal.
Good luck, being debt free is powerful, I commend you for making it your goal.
Posted on 10/8/17 at 1:18 pm to King of New Orleans
Yeah Ramsey's debt snowball is really aimed at people with spending problems, so paying off the lowest balances, no matter the interest, gives these people a sense of accomplishment and quick reward. There is a place for this approach but it really depends on the individual
Posted on 10/8/17 at 1:29 pm to King of New Orleans
First off, great job on making the commitment to getting your finances in order.
I agree with what others said. As long as you stay with this for the long term, pay off the highest balances first. But if i had a small bill that I could knock out with a few months payments, I might do that first just for the satisfaction of it.
I agree with what others said. As long as you stay with this for the long term, pay off the highest balances first. But if i had a small bill that I could knock out with a few months payments, I might do that first just for the satisfaction of it.
Posted on 10/8/17 at 3:10 pm to King of New Orleans
Highest interest rate first, and that is almost certainly the credit cards.
Paying off the cards has the additional advantage that you don't need an emergency fund while you're targeting them. If an emergency does happen you can charge it back up.
Paying off the cards has the additional advantage that you don't need an emergency fund while you're targeting them. If an emergency does happen you can charge it back up.
This post was edited on 10/8/17 at 5:43 pm
Posted on 10/8/17 at 8:05 pm to King of New Orleans
Pay off the credit cards, tear them up and never ever carry a balance on a credit card from one month to another. If you can't keep from doing that then throw them all away so you will not be tempted.
You will sleep better and manage your money better without credit card debt.
Who wants to work and live to pay huge interest on credit cards.
You will sleep better and manage your money better without credit card debt.
Who wants to work and live to pay huge interest on credit cards.
Posted on 10/9/17 at 9:04 am to King of New Orleans
Dave Ramsey's method is also the quickest way to more financial freedom which is not the same as being the best fiscal choice as far as saving money.
Everything comes at a price and so does financial freedom. One big benefit of the snowball method is that you are freeing up income that can be used for other things but not forced. As you eliminate each debt, that is something you are no longer forced to make payments on.
The more of this "freed up" money you have, the more you can cover a bad month or unexpected expenses that pop up for those of us living in the real world. If you have plenty of disposable income after allocating all your required expenses, this shouldn't be a concern for you. But if you are living paycheck to paycheck, freeing up the budget to handle the unexpected does end up being a good fiscal choice if it prevents you from having to use a CC or take on a bad loan again.
Find what your priorities are before deciding.
Everything comes at a price and so does financial freedom. One big benefit of the snowball method is that you are freeing up income that can be used for other things but not forced. As you eliminate each debt, that is something you are no longer forced to make payments on.
The more of this "freed up" money you have, the more you can cover a bad month or unexpected expenses that pop up for those of us living in the real world. If you have plenty of disposable income after allocating all your required expenses, this shouldn't be a concern for you. But if you are living paycheck to paycheck, freeing up the budget to handle the unexpected does end up being a good fiscal choice if it prevents you from having to use a CC or take on a bad loan again.
Find what your priorities are before deciding.
Posted on 10/9/17 at 10:24 am to King of New Orleans
quote:
I am trying to follow Dave Ramseys debt snowball
This is the biggest problem with his entire program. You should always always always pay off the debt with the highest INTEREST RATE first.
Posted on 10/9/17 at 11:28 am to King of New Orleans
I always gasp when DR is mentioned on this board =)
His system is one that works. It 's not the only one that works. It is simple and it gives you small victories.
Paying the card with highest rate first may save a tad bit of money in the long haul... but if it takes you 8 months to do it... human behavior says most people will quit before you get there. But pay off a card or two quickly, might let you see progress.
If you listen to DR for more than 90 seconds you realize his methods are much more human rationality and behavior than pure economics.
Which is interesting because most people don't get in trouble because they have a money problem, they get in trouble because they have a behavior problem.
His system is one that works. It 's not the only one that works. It is simple and it gives you small victories.
Paying the card with highest rate first may save a tad bit of money in the long haul... but if it takes you 8 months to do it... human behavior says most people will quit before you get there. But pay off a card or two quickly, might let you see progress.
If you listen to DR for more than 90 seconds you realize his methods are much more human rationality and behavior than pure economics.
Which is interesting because most people don't get in trouble because they have a money problem, they get in trouble because they have a behavior problem.
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