I need advice, I am new at paying off debt and feel like I’m drowning

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  • #80195 Reply

      I want to start the snow ball method and currently I have

      Card 1 845.73 (19.99%)

      Card 2 942.47 (19.99%)

      Card 3 2797.45 (20.99%)

      Line of Credit 4881.81 (16.99%)

      I’m planning on paying 300$ a month on these (minimum, then the rest on card 1, then once paid off, card 2 etc).

      My question is, I am expecting about 2500$ tax refund in may/June, should I put it on card1, then leftover on 2 etc, or should I just knock out Card 3 then increase my payment to my other cards since I no longer have that minimum?

      I’m hope this makes sense!

      #80196 Reply

        We did the snowball method once we had $1000 in our emergency fund and then we really worked our patootie’s off to pay down the debt in order to go to step number three. We paid off $40,000 in one year.  Good luck.

        #80197 Reply

          Personally I’d put it on card 3. It’s the highest interest and once the two smaller cards are paid off (fairly quickly with your snowball), you’ll be able to attack that line of credit with a vengeance!

          #80198 Reply

            I’d recommend the avalanche method here. It feels like alot of debt but it will be gone in no time. Xx

            #80199 Reply

              The interest is only 1% apart so it really doesn’t matter which you pay off. Right now you are paying 20% interest on $4600, after the lump sum you will be paying 20% interest on $2100 whether it is on one card or split up over two. I would probably pay the smaller two so I’m down to one payment. Paying card 3 will save you a very small amount of interest. You can’t go wrong either way.

              #80200 Reply

                Do you have an emergency fund? If not, then I would put $1K in a separate savings account, then pay Card 1 and then the rest on Card 2. Continue paying the minimum on Card 3 and LOC. Once Card 2 is at $0, snowball Card 3 with minimum LOC…

                #80201 Reply

                  If you have enough to fully knock out the 3rd cc then do it. If not start at the bottom and work your way up. This is assuming you have your $1k starter emergency fund. If not set aside $1k for emergencies and then start at the bottom and work your way up.

                  #80202 Reply

                    I’d use the tax refund to pay off 1 & 2, keep the rest for an emergency fund. Then add the payments for 1 & 2 plus your extra each month to 3, while keeping up with the minimum on 4.

                    #80203 Reply

                      I made sure I had a $1k emergency fund before I started extra debt payments.

                      After that’s established, I use the snowball method (lowest balance first) but whenever I get a lump sum of money (windfall) I look to see if I can pay off 1 large account entirely. If so, pay off that account, if not…add it to your snowball. In your case, you can pay off one of your larger accounts completely, so I would put it towards CC 3. If you don’t have a starter emergency fund, I would put money towards that first though.

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