what to pay off first??

[nmboone]

I know this isn't really advice, I just wanted to comment on how much money people can make yet be in so much debt! It's insane. I mean I'm in a lot of debt, but I just graduated from college. But if I made 130,000 a year I would seriously be rolling in dough! I would just save up for the bigger things I needed like cars and houses and just buy them outright! There would not be debt.

It reminds me of the stories in Money Magazine. They feature couples with ridiculous 6-figure incomes and then the couple says they can't retire. Umm, what???

I'm rambling a bit here, but I want to one day start a magazine about real people's money problems. Either that or a tv show. The people will have incomes like between nothing and 70,000 and will showcase their money problems and be given solutions. It would sell big time.

[ea1776]

I mean I'm in a lot of debt, but I just graduated from college. But if I made 130,000 a year I would seriously be rolling in dough! I would just save up for the bigger things I needed like cars and houses and just buy them outright! There would not be debt.

That is so much easier said than done. Remember, being in debt is rarely an income problem. It is almost always a behavioral/spending issue. Those issues span a wide margin of the socio-economic spectrum. People get raises and think "I wonder what I can buy now" when many times they should be thinking "now I can put away even more savings". I know, because I have learned the hard way.

[Inkstain82]

I know this isn't really advice, I just wanted to comment on how much money people can make yet be in so much debt! It's insane. I mean I'm in a lot of debt, but I just graduated from college. But if I made 130,000 a year I would seriously be rolling in dough! I would just save up for the bigger things I needed like cars and houses and just buy them outright! There would not be debt.

There are people who make a fraction of what you do, I bet, who wonder how you can possibly be in debt. And that's not even including people from poorer countries.

After you make enough to live on the very basic necessities, it's very, very hard not to just up your lifestyle with your paycheck.

[Runaway Finances]

I agree paying off the IRS is first. However, the real problem is your spending. You are spending significantly more than your income or you wouldn't have so much debt. Someone said you have to address the behavioral problems that got you in this mess. That problem is spending more than you earn. If you don't change the spending problems then you won't ever get out of debt.

I'm one who believes you should pay down the highest interest rate balance first, but you need a spending plan first. You need to figure out what your fixed expenses are, how much you can afford to spend on debt reduction and how much you can afford to spend on discretionary purchases. Until you do this, you will never solve the problem that got you to this point.

Personally, you are way over your head financially on the mortgage. Sell the house. Add up your operating costs including utilities, property taxes, home insurance, mortgage payment, utilities and maintenance. You will find that you could buy a house for half the price and cut everything in half. This would create cash flow to pay down your debt. In fact, you might be better off renting for awhile and buy a house when the debts are paid off. With housing prices down in many areas, this move would have been better a couple of years ago, but that's life.

You can go to our website (Runaway Finances) if you need help with developing a spending plan. It's a subscription service, but it makes it really easy if you don't know how to do it on your own.

Hope this helps. Feel free to ask questions. I try to follow up on the blogs I've posted messages to as I love helping people with their finances!

[Sonja]

IRS first, then student loans, then the rest. Car payment is of the least importance, but maybe I'm just not fond of cars, sorry...

[tripods68]

You should be able to make a scheduled IRS payment until its fully paid. This should be your priority before anything else. All your extra income should be towards this at all cost. After this, start the "snow ball" affect to pay off other bills.