OT: i have a chance to eliminate 1/3 of my credit card debt. best strategy?

[C-Dawg]

I'm doing the debt snowballing plan as we speak and it has done wonders for me. I started early this year and will have all debt payed off by next summer.

[Tone Monster]

I hope I'm wrong, but with your charging history I'll be suprised if you actually pull the trigger on "letting go" of the $5000 when the time comes. If you do make the right choice, mhenson has it right, pay off the balance(s) with the highest interest rate first. The rest will take you quite a while to pay off. Stay diligent and good luck. Learn to hate debt.

[venivici]

Debt snowball is definitely an awesome tool and works really well in a pratical and manageable way.

[SoTotally]

That's a sick amount of debt. You're screwed. Find a rich ugly girl, give her all the lovin' she wants and let her pay those off.

I thought I had it rough with about $2800 in total CC debt. That was nothing.

good luck! all joking aside though, drop the 5 grand on whatever has the highest interest. cause with all that debt you are getting raped by the interest.

you should look into debt consolidation loans or something like that, just get a percentage rate lower than your lowest CC percentage rate if possible. stop the rape as soon as possible.

[satannica]

I would do this:
Apply for a 0% balance transfer card and transmit as much as the HIGHER SUM interest balances as possible. What I mean is, one card may be a higher %apr, but not costing as much in real money as another lower % card with a higher balance. So decide what's costing you the most in interest monetarily and transfer that. If your credit is good you should be able to get one to cover a good $6000, or possibly $8000. Do this BEFORE paying anything off to keep you still credit worthy.

Most deals last a year, so use that year to stooze those debts and just pay the minimum amounts. Work on the rest with the

[heath]

Alot of times you can contact the credit card company, tell them you want to pay off the card and ask what the payoff is. In many cases they will lower the final amount if you pay it in one sum. You may be able to shave some of the debt off the top this way, then use the snowball method on everything else.

[mhenson42]

Debt snowball is definitely an awesome tool and works really well in a pratical and manageable way.

 

 

The debt snowball approach is good if it forces a payment plan discipline on a debtor. But as I explained above, why would you pay off 5 cards with $1,000 each on them, but having an averae interest rate of 12.9% before paying down a card with $15,000 by $5,000 when that card carries a 19.95%? Does not make sense from an economic stand-point.

[bluesboy]

4620/9400, 13.24

2320/6000, 13.25

2708/5100, 19.99

4988/14300, 9.24

3202/4500, 12.24

The above APR's are for regular purchases, i never use cash advance. 3 of these cards are rewards cards.

i wont get completely into how i acquired all of this debt, but it obviously involved buying things I couldn't afford.

In addition to music stuff, a laptop is in there (i needed a new computer, absoultely necessary for my work).

Also, a honeymoon vacation/ airline tickets is all in there.

Groceries, gas, etc.

Going out to eat (we do this way too much!)

I havent bought any golf/music stuff in along time, and i dont plan on it.

I also have some store credit cards (like bonton) that i never use and have a zero balance.

[mhenson42]

2320/6000, 13.25 2708/5100, 19.99

 

 

Pay off these two. $5,028

 

/thread

[venivici]

The manner in which it accelerates debt payoff actually can outweigh going for the highest interest first. In additon, once you pay off the 5 cards, you take what you would have paid monthly towards them, and apply that payment to the next card, thus accerlating the payoff. Also, amortization doesn't really change that much in the broad scheme under thismethod.

[grumphh]

Not sure if you're saying this in jest, but this modus operandi is at the heart of our financial woes.

Ermmm... i have no idea about economy - and especially not in the USA but..

No way... if he closes them all his credit score will be destroyed for years to come.
If this statement is true i would think that that actually might be your problem right there rather than random bankruptcy filings.

Rewarding not the people that can actually pay off their debts but rather those that continue to have debt.
Sorry, but no matter how you want to explain a system like that, it is simply wrong.

[mhr74]

I'd attack whatever was causing the most interest I also wouldn't close anything totally out. CC companies are closing cards right now and if you pay one off and they lower the limit way down or close it it's gonna hurt your credit.

 

 

this

[mhenson42]

The manner in which it accelerates debt payoff actually can outweigh going for the highest interest first. Also, amortization doesn't really change that much in the broad scheme under that method.

 

 

The same amount of debt is reduced either way. Total debt goes down by $5,000 no matter where its paid. Who cares about have 20 small balances or 5 larger balances. If your rate is higher, more of the amount you do pay goes to interest. Fact. Amortization speed is not relevant because we are talking about maximizing debt reduction. The key is to make more of your payment amount apply to principal, not interest. The only way to do that is to pay off the higher yielding debt first.

[Ron Burgandy]

4620/9400, 13.24 2320/6000, 13.25 2708/5100, 19.99 4988/14300, 9.24 3202/4500, 12.24 The above APR's are for regular purchases, i never use cash advance. 3 of these cards are rewards cards. i wont get completely into how i acquired all of this debt, but it obviously involved buying things I couldn't afford. In addition to music stuff, a laptop is in there (i needed a new computer, absoultely necessary for my work). Also, a honeymoon vacation/ airline tickets is all in there. Groceries, gas, etc. Going out to eat (we do this way too much!) I havent bought any golf/music stuff in along time, and i dont plan on it. I also have some store credit cards (like bonton) that i never use and have a zero balance.

 

 

Sounds like you have good credit as it is, however overall utilization is hurting you for sure as you're at 45% of your available credit.

 

Kill the balance on the 19.99% card, throw the balance of the $5k at one of the other cards, then transfer the rest on to your 9.9% card, as you have the room to place the remaining debt all on that card. If for some reason another deal comes along (0% balance transfer offers, etc) just transfer that entire balance on to the new card.

[PlayboyChris]

Only thing worse than having a lot of credit card debt is seeking advice on how to wipe out said debt on the Harmony Central Amp Forum.

[Ron Burgandy]

Only thing worse than having a lot of credit card debt is seeking advice on how to wipe out said debt on the Harmony Central Amp Forum.

If you weed through the Dave Ramsey tards (aka the people that {censored}ed their credit long ago and are now scared of credit), and the mongoloids advising him to file bankruptcy, you can actually find some good advice on this forum

[PlayboyChris]

If you weed through the Dave Ramsey tards (aka the people that {censored}ed their credit long ago and are now scared of credit), and the mongoloids advising him to file bankruptcy, you can actually find some good advice on this forum

Yeah but good advice is rarely followed around here. If that wasn't the case, not a single Bugera or used Blue Voodoo would ever be purchased.

[chakosh]

 

Sounds like you have good credit as it is, however overall utilization is hurting you for sure as you're at 45% of your available credit. Kill the balance on the 19.99% card, throw the balance of the $5k at one of the other cards, then transfer the rest on to your 9.9% card, as you have the room to place the remaining debt all on that card. If for some reason another deal comes along (0% balance transfer offers, etc) just transfer that entire balance on to the new card.

 

 

This is what I'd do as well... Knock out the highest interest rate and work your way down. I'd leave about a $1k buffer in your bank instead of blowing your entire $5k. But, that's just me.

 

Honestly my wife and I got into "get the f**k out of debt"-mode when we were getting ready to buy a house... Now that we're both out, we've kept the same mentality - if we can't afford to buy it on a debit card, then don't buy it. Granted, I still filter stuff through a Discover card for the cash reward, but I pay it off every month now instead of letting balances sit on there.

[mhenson42]

Tranferring balances to lower rate cards is a good idea, if it can be done for free or at little cost. If they charge 3% of the balance or something, then you need to weigh that cost against the added interest cost of the higher rate card over the amount of time you think you need to pay it off.

[ckreon]

If you weed through the Dave Ramsey tards (aka the people that {censored}ed their credit long ago and are now scared of credit), and the mongoloids advising him to file bankruptcy, you can actually find some good advice on this forum

I lol'd

Using plastic is easy, but I still don't understand how a scientist was not able to control his wants/needs in a situation. Generally speaking, those in the scientific community applaud logic, and generally aren't as concerned with the material world.

Not throwing any blows at the OP, just a bit surprised is all.

[PlayboyChris]

Granted, I still filter stuff through a Discover card for the cash reward, but I pay it off every month now instead of letting balances sit on there.

 

 

Enjoy that action while you can. In the wake of the recent credit card legislation passed by Congress and soon to be approved by Obama, you can expect cash rewards, points and a lack of annual fees to go the way of the dodo.

[PlayboyChris]

Using plastic is easy, but I still don't understand how a scientist was not able to control his wants/needs in a situation. Generally speaking, those in the scientific community applaud logic, and generally aren't as concerned with the material world. Not throwing any blows at the OP, just a bit surprised is all.

 

 

People always assume that CC debt has been accrued due to the purchase of big-screen TVs, lavish vacations and the like. Maybe OP put some or all of his schooling, books, etc. on his cards. Sometimes you gotta do what you gotta do. I'd never talk someone out of putting an education on a credit card if that's what was necessary. Now, if OP had a lengthy signature listing all the expensive boutique gear he owns, that would be a different story.

[chakosh]

 

Enjoy that action while you can. In the wake of the recent credit card legislation passed by Congress and soon to be approved by Obama, you can expect cash rewards, points and a lack of annual fees to go the way of the dodo.

 

 

Exactly why I'm doing it this way while I can. I'm putting pretty much everything on there while I have the chance - gas, groceries, etc. Pretty much everything other than stuff at local businesses (I try to pay cash for local folks as much as possible so they don't have to pay the CC fees).

 

At that point I'm probably going to see if they'll still link Frequent Flier miles on a United Mileage Plus CC. The wifey and I are going to Japan this fall on my FF miles, so having enough to do a European trip next year would be nice.

[Ron Burgandy]

Tranferring balances to lower rate cards is a good idea, if it can be done for free or at little cost. If they charge 3% of the balance or something, then you need to weigh that cost against the added interest cost of the higher rate card over the amount of time you think you need to pay it off.

 

 

Damn, I didn't even think about that. I've only balance transferred a couple times, and both were on offers in the mail for 0% and no fees.

[Ron Burgandy]

I lol'd Using plastic is easy, but I still don't understand how a scientist was not able to control his wants/needs in a situation. Generally speaking, those in the scientific community applaud logic, and generally aren't as concerned with the material world. Not throwing any blows at the OP, just a bit surprised is all.

Who cares how he got into it? The point is, he's making an effort to fix things, which is not how the average American thinks these days. Maybe you should stick with solution oriented responses as opposed to thinking in hindsight.