Post # 1
I am working on paying off our debt, in particular credit card debt. I am going to pick the credit card with lowest balance and pay that off, and work from lowest to largest . When one is paid off I am going to snowball that into the next card.
Anyone else working on paying off debt? What has been your strategy? Success? Do you use any money on “unnecessary things” like going out to eat, etc or do you adhere to a strict budget?
Post # 2
The only debt I have is from student loans. I’ve been paying the minimum payment plus a percentage of the balance every month. I just set a percentage and went with it. I managed to pay off the first $5k loan pretty quickly for someone who was working for minimum wage at the time.
Post # 3
I have school loans that I’m still working to pay back. I have 3 ongoing loans so it makes it difficult to tackle at specifically one because interest is accumulating as I type!! I’m just trying to pay above the minimum every month, and pay a little bit more on the loan with the least amount owed. I don’t really have a strategy besides making constant payments and then sometimes paying more when I have that extra money to spend. Also, I am not very strict with my budget. I put aside enough spendings to be able to still live life comfortably. I don’t like the feeling of not having money to spend… it turns me into a very stingy and cheap/frugal character… and I’ll always have money on my mind and I’ll worry about money all the time in all aspects of my life!
Post # 4
We pay off all 3 of our credit cards every Friday so we don’t dig ourselves into a hole. We don’t really go out much and we’re not big spenders, so we’re still able to save about 2 grand a month without stressing. BUT if you’re talking about credit reports…. I pulled my report a few years ago and anything that was 4 years or older, I disputed and said it was paid in full. More than half of what was on there got knocked off. The rest I called and would barter for a smaller amount if I paid in full right away. So one place I owed 2k to, I offered them 750 if I paid it in full right away, they came back with 1k so I saved 50% and that was that! If that was not an option, I worked out a payment plan. Now my credit is waaaaay up and we’re working on FI’s report next!
Post # 5
My Dear Fiance is a CPA, so he created this awesome excel spreadsheet with my 3 loans on it.. let me take a SS quick:
So using that, I can type it the amounts of “additional” I want to pay, and see where it saves me the most money. I had always been paying toward my car extra, since it had the shortest term and highest interest, but when we did this, we realized it didn’t save me hardly any money! So we switched my strategy to pay more off toward my student loans and saved like $500 on each loan by paying $1000 up front.
Just today I used it to see where I should put the extra $500 I wanted to pay with my tax return. I played around with it and saved a whopping $13 lol But on there I figured out that even if I paid off my car COMPLETELY today.. It’d save a total of $27. crazy.
So I suggest trying to do something similar and going from there. 🙂
Post # 6
Sorry that smooshes it so much, if you’re interested message me and I can try to send it another way to hopefully be readable
Post # 7
- Wedding: Cathedral of the Immaculate Conception/The Gallery
I just used my WHOLE tax return (and my largest ever, as well) to pay off all my consumer debt as well as a small student loan. Like today.
So now I only have my student debt left. It’s an awesome feeling but I still have a high monthly payment for that debt. I am guilty of not being great at sticking to a budget–I really love eating out. And shoes, but I’m using Mint.com & the app to actually include those things in my budget, keep track of how I’m doing and still be able to save (phew!)
I think allowing yourself some “fun” money is so important. If you don’t you’ll never be able to stick to your budget because it will be all work and no play.
Post # 8
- Wedding: Cottage on the Creek
you should really look at interest rates and pay the highest one first. that will save you the most $$$ in the long term!
Post # 9
We paid off some credit card debt recently. Instead of paying the lowest balance first, one thing we did was go through all the credit cards and find the highest interest rate card. That one got paid down first. The difference between some of our cards was 5% or more, so it really adds up. I also use smartypig to pull money out for emergency savings and our wedding fund automatically. Then it just becomes like a bill to me, and its separated from the rest of my banking accounts so I don’t think of it as spendable money.
Post # 10
My personal, unprofessional, opinion on this:
– If the loan is small and easy to pay off in one or 2 installments, pay that first, earn a feel good kicking debt’s arse feeling. Snowball those payments to the next one.
– However if there isn’t an easy to pay off loan/card in the bunch, pick the card with the highest interest rate (and if you have 2 the same, the highest balance.) Pay the minimums on everything else. Stop using the cards/loans completely and pay for all your expenses with cash/debit (I personally like debit because I will spend cash on stupid shit if I have it. Seriously. Like pop from a vending machine or a cookie. Just because I can. With debit I pay to the penny what something costs and no more. And since vending here doesn’t take debit, I can’t spend any extra. And bumming a loonie from a friend gets annoying, so I’ll stick with water/what I bought with me.)
– once a loan gets paid off, roll the payment to the next loan with the next highest rate and next highest balance. The only exception I could see is if a loan gets close to the end and you can pay it off in 1 lump sum. Then go for it and get those feels again.
Also, as far as budgeting goes, I’m personally not a fan of going to shoe strings to save for something (or to pay something off.) I don’t mean you should plan for frivolous things, but give yourself some breathing room – allow for some entertainment or eating out each month. I think that would help keep things on track. One thing I’ve tried to do, is when I get a raise, I try to squirrel the increase amount away in a savings account and continue to live off my previous wage. It helps build a nest egg. Eventually I re-jig and up what I live off again, but never to the full wage I’m earning, always to the previous rate.
Post # 11
I disagree with the snowball method since it doesnt necessarily save you the most money in the long run, and I’m more about the big overall picture. I know it gives people the warm fuzzy feeling of paying something off though, and that does seem to movtivate people. I have a coworker who buckled down and paid off over 50k of debt in 2-3 years with the snowball method, so it does work. He went with a strict cash only envelope budget.
Post # 12
Fiance has about 1k in overdraft and hi have about 25k in student loans.
I pay the minimum balance (which I negotiate a few times a year) and it’s basically peanuts. I’ll be paying it off until I die this way, but since it’s interest free (for now) it works.
Post # 13
Both Fiance and I have student loan debt and I have some small credit card debt. Not planning to pay off the CC debt right now since it’s interest free for the next 2 years whereas my student loan interest rates are crazy high. I’m pushing as much money as I can towards the student loans.
FI’s student loans are astronomically high- we are hoping the majority are forgiven through a government program since Fiance works in non-profits. But- like all government programs- who the heck knows if it will come through!
It’s good advice to put together some type of spreadsheet (like BdiBdi’s) and calculate where your money will get you farthest right now. Checking your interest rates is key.
I totally relate to the debt struggle, good for you for facing it head on and trying to make smart fiscal decisions. Good luck!
Post # 14
Oh and I should note that right now, it actually saved me a bit more (not much because of where i’m at in the payoff) to pay the middle loan this time, because though it had a lower interest rate, it had a higher balance. So, that’s why something like my spreadsheet is very helpful because you can see it all.
If you can see it, you will see how when my car is paid off in june, I transfered that $300 payment to my student loans, to plan it out.
Post # 15
Snowballing and tackling highest interest are both good methods. Paying off highest interest first may technically save more in the long run, but it’s not usually a noticeable amount compared to snowballing. I.e. overall you might save $1500 with one method and $1000 with the other method.