Need some help with clearing my debt

[Trying2save]

Just a little background about me:

I'm 26 and currently employed fulltime and make good money for someone my age. I'm currently carrying CC debt of about $3,300.00 at a rate of 12% and 18%, student loan of $6,200.00 at a rate of 5%. I contribute to my RSP plan at work and get the full match on 4% and am also enrolled in the stock option. I also have an individual RSP that I contribute to through ING Direct (which is only at 2%). Very little savings including EF (think mid three figures)

Now, my plan of attack is this : pay down the CC with the 18% interest and get that out of the way, then tackle the other CC debt (at 12%). I'm doing the minimum on my student loan since the interest is so low. I'm also currently putting away $100 to my RSP through ING but I think I should stop that and fund my EF instead. Since I am already contributing to RSP through work.

Anything else I should be doing that I'm not? Any advice would help greatly.

Thank you!

[creditcardfree]

Wow, I think you have come up with a great plan.

An emergency fund is very important. If I understand you correct, you will keep contributing to the RSP at work. That is a great idea because of the match and the fact that stock prices are at record lows. At your age, time is on your side for those shares to increase in value.

How long do you think you can pay these debts off? I think you have ordered them correctly.

[Trying2save]

I'm well on my way into paying my CC debt. I'm planning on using my "extra" paycheck this month (get paid 3x this month) to my 18% CC debt, at that point I should be at around 2K in CC debt. The remainder should take me 2 months or so to pay off.. I'm realy putting myself on a budget and tracking all my expenses, which takes work, but it really helps me out to see where my money is going.

A goal of mine is to start saving for a downpayment, so once I get all the CC debt out of the way, I'm going to save towards that, an EF and pay a little more on my student loan.

Thanks for your help, it's always nice to get another perspective

[kork13]

I think you've got a good plan to start with--definitely get the CC's paid off ASAP, which will help your plan significantly. For now, I would focus primarily on the EF, but also don't totally abandon the personal retirement plan (is it a Roth?). If you only have $100/mo to split between the EF and retirement, I would send $75 to EF, $25 to retirement. Try to reduce your expenses so you can start saving more, I'd say 3:1 ratio of EF:retirement. Once your EF is about 3 months' worth of expenses, move the ratio down to 2:1. Once the EF is 6 months' worth, make the ratio 1:1. Since you're wanting to save a downpayment, maybe start separate account, and start building that one up once your EF is up to 6 months. That way you get your EF built up to where it needs to be, but are still contributing to your retirement plan.
Also, once you pay off all of your debts, make sure to roll those monthly payments into your savings plan.

[lennygaudy]

I agree you've got a great plan-you're way ahead of where I was when I joined this forum recently in a desperate search for help on how to reduce my debt. You mentioned you're thoroughly tracking your expenses but in case you haven't already found a way of keeping track of your debt payoff status, here are two of the best tools this forum introduced me to:

Debt Reduction Calculator:

Free Debt Reduction Calculator for Excel

DueMinder (similar to calculator above but online so you can access it from anywhere):

DueMinder.com

These have really given me a roadmap to what my path to debt freedom looks like. They are a great supplement to any budget. Best of luck!

[johninsurance]

thats not a bad plan at all, dpet usually starts getting stressfull when ur past the 10k mark

[ukey]

sounds good to me.

I'd like to suggest that money in the bank will give you more confidence and encouragement from the start. So is there any chance that you can put a small amount for emergency fund and/or long term savings, while you are paying up the 18% credit card debt?

For consideration

[atsgreig]

sounds good to me.

I'd like to suggest that money in the bank will give you more confidence and encouragement from the start. So is there any chance that you can put a small amount for emergency fund and/or long term savings, while you are paying up the 18% credit card debt?

For consideration

Yes i am also agreed with u. Bank is a safer option.