s2000Junky

Hey guys, currently I am 14k in total debt (3 credit cards) and I have been making double or more the min payments for each card each month, as my goal is to pay them off as soon as possible within my ability, but rather then just throwing money at them all blindly, I was trying to think how I might be able to make what money I am allocating per month to pay off this debt to be the most effective and pay off even sooner if possible. Two cards are at 10.9% and one at 9.9% all have pretty much the same amount owing totaling 14k as mentioned. I was thinking rather then dividing my money even between all three with say double payments, would it be more effective to pay the minimum on two wile I pay 3 or 4 times the min one card to get that paid off even faster and then systematically move on to the next one as I pay each off? The trick for me and what I could use some help with is trying to figure out whats the best way. Is there some kind of debt calculator you can plug all your info into and tell you the most effective way to pay off your debt? Any website link to such a calculator? My goal is to be debt free within 2 years or better if possible and then be able to actually start having some savings. Any help is much appreciated

SlowTeg

Simple. Make the minimum payments on the card with the lower interest rate and the one with the 10.9% rate, and pay the maximum you can towards the card with the 10.9% rate until it's paid off. Then payoff the next card with the 10.9% rate. Another consideration would be to look for a card or sign up for a card that has a lower interest rate, and transfer the balance onto that card (as much as you can). Many cards will give promo interest rates on "balance transfers" which can be as low as 0% for a stated period of time.

s2000Junky

^^^ I’ve done those 0% transfers in the past, and though they are good for the 6 months or year you have it, generally the interest rate goes to a terrible rate like 15%-20% at the end of the term so if you don’t pay off the balance within that time frame you are shooting yourself in the foot. Also there is a initial fee to make the transfer. At this point I don’t think my credit is good enough to get a worthwhile balance transfer option anyhow so I think this option is out for me.

So you feel stop paying double payments on two of the cards and switching to paying the min on those two, wile allocating that extra to one card will work out to paying less interest over duration vs paying double the min on all three cards at the same time like am currently? Just a rough est in my head and a few rough calculations, I haven’t been able to discern a clear best option. It could be a wash, I don’t know.

Is there any formula/calculation you use to have brought you to your consensus? I'd like to be able to figure out how to make my money work for me as best as possible.

Here is the breakdown on my balances and what I have been paying each month as well as what the min due is currently.

9.9% $4300... min-$76 ...pay-$150

10.9% $4600... min-$96 ...pay-$200

10.9% $5100 ... min-$130 ...pay-$200

Thanks for your feedback.

SlowTeg

Well, math says paying double payments on the two higher rate cards or one large payment on one of the higher rate cards will ultimately be the same in the end (in terms of interest). I just like the idea of paying the max towards one of the higher rate cards just so that I'll pay one off sooner and only have 2 vs. 3 cc balances, even if the balance will be higher on the 2nd 10.9% rate card. Ultimately like I said, either way will mathematically work out to be the same.

Yep, balance transfers may not be the best option, just figured I'd mention it in case. Best way is to run the numbers on all the fees/costs/interest of the balance transfer and see how it compares to just paying the interest. If it's higher, don't bother.

The only formula you need to use is payoff the higher interest rates before lower rates. Just run some simple numbers yourself.. $10k at 10% interest, spread over 1,2,3,4.. cards is $1k in a year.

s2000Junky

Thanks again for the feedback.

Ugh… I just wish I could pay it all off today. I am tired of throwing away money on interest, and not having that $550 a month available to me, wile supporting corrupt/unethical financial institution with my business. After these are paid off I vow never to use a credit card again!

SlowTeg

No problem man. Ya I despise paying interest, but we all do in one form or another (mortgage interest/etc). CC debt should always be avoided, but I understand sometimes shit happens and you may not be able to avoid it. The banks own us is the unfortunate reality, no way to get around it.

s2000Junky

Oh I’m working on getting around it. I already gave them back my worthless home that they sold for pennies on the dolor to some investor. Feels good to give them a dose of their own medicine. Unfortunately not everyone in this country lives in a Non right to recourse state, which is really unfortunate. After owning a toxic asset aka home for the last 8 years. It feels liberating to not be in debt to some financial institution any longer. I have no more car payments either. This 14k in credit is it and im a free man. Been there done that!

Heyitsgary

I'd think that with the cards only being 1% difference, that there really isn't much of a difference in the order you pay them off. If it was 2, 3 4%, then you'd probably have a clearer path.

I do agree with you that there is some personal satisfaction about getting rid of one card, and then only dealing with 2, then only dealing with 1. That also likely frees up some space for a 'real emergency' if you need to use the other card again.

I don't necessarily agree with your position that the banks, etc... are corrupt or unethical. You knew exactly what you signed up for when you got the cards. You borrow TODAY for something, and agree to pay back over time with interest.

If you didn't like the conditions by which you got the cards, you didn't have to sign the application.

SlowTeg

Yep fair enough.. unfortunately with how banks work, they're offsetting those losses (and then some) with my mortgage payment and plenty of others.. It's hard to not win when u can literally and figuratively print money. Ultimately we all get bent over one way or another.

Heyitsgary

Remember that banks own almost all of the risk on about all of the loans they provide.

Then, on top of that, if banks (or any corporation lets say) didn't make money, their stock price wouldn't appreciate (theoretically), and you're future earnings, through a 401K or similar, or just in investments in those same companies wouldn't be worth it. We live in a society that unfortunately requires us to pay today for tomorrow's return in some way. Also, the money they make in fees and interest I'd presume would go to paying salaries for those people who work there.

We only get bent over if we make decisions that let us get bent over, and to the degree with which we're comfortable doing so.

S2000Junky- sorry to hear about your house, glad to see you're working yourself to a debt-free situation.