My plan to be debt free

[woodie96]

doing great Radiance....keep up the great focus and keep plugging away!!!

congrats!!!

[creditcardfree]

Yes, CC->EF->Car!!!
I feel great about this!

You should feel great because you are doing great! Keep up the good work.

[Radiance]

Yes, CC->EF->Car!!!
I feel great about this!

[creditcardfree]

Personally, after your EF, I get rid of that credit card first.

Oh, maybe you are working on the credit card, EF and then car. That would be great, too!

[Radiance]

I am switching gears... My EF is $1500. and my oustanding debt is $10,100:

Visa
Balance: $2200
Limit 2800 --->Reduced from $5000
Interest: 12.99%
Available balance: 0
Monthly interest fees: $31
Annual Fee: None
Monthly minimum: $50

Car loan
Balance: $7900
Interest: 5.95%
Monthly payment 297, out of which 49 is interest, 248 goes to principal
Monthly interest fees: 49

I want to pay the Visa because I am so close and the interest is higher.
But, instead of pre-paying the car, I want to build an stronger EF first.

I want at least one month of expenses in the bank (currently I need $4000 to cover monthly expenses comfortably)

When my EF is $4000 I can allocate some money to keep on building EF and some to prepaying the car...

What do you think?

[graceful]

WTG!!!

[Slandgie]

Awesome news! Keep us posted on your quest to be debt free!

[Radiance]

Hello!

I got a bonus at work and sent it to my personal loan without thinking much about it!

I did complete a short sale in November so my creditors are more and more aggresive reducing my limits. Also I called my bank to further consolidate and they advised me to not even apply due to the short sale. That is ok, I have 3 accounts left, I'll pay them separately.

ok, so we have:

Visa
Balance: $2800
Limit 2800 --->Reduced from $5000
Interest: 12.99%
Available balance: 0
Monthly interest fees: $31
Annual Fee: None
Monthly minimum: $50

Personal, non revolving loan
Balance: $1600
Interest: 16.45%
Monthly payment 360, out of which 85 is interest, 275 goes to principal
Monthly interest fees: 85

Car loan
Balance: $8600
Interest: 5.95%
Monthly payment 297, out of which 49 is interest, 248 goes to principal
Monthly interest fees: 49

Paid for accounts, keeping them open for now:

Care Credit
$5000 available credit @ 23% (only for health services)
Annual Fee: None

Amex
Interest: 27.24%
Available balance: $1600
Annual Fee: None

I am just waiting for my tax return to make another bulk payment!

[Slandgie]

Hey Radiance, give us an update!

[sfalexi]

Once I pay off my credit cards, I plan on canceling both, but opening one that has some sort of rewards/cash back or rebate system. Even if it's only 2% rewards or cash back, at least that makes my necessary monthly expenses (Gas, Food, etc.) that much less expensive. And I'll pay it off every month. Something to think about.

Alexi

[Radiance]

Thank you!
I've never heard Ramsey, but i have heard a lot about him here, so I might.
As per keeping cc, I am for now (Master is long gone) because I do not have adequate savings. Just 2k. I want 6 months of income in the bank. ... but that is another series of objectives, 2k will have to suffice for now.

Anyway, two of my shirts and 3 of my shoes dye down on my in the last 2 weeks... so I need to do a little spending there.

[bheem]

Man.. you rock! Your approach of hitting the smallest debt first is very good strategy from an emotional boost stand point. By any chance are you a Dave Ramsey listener?

I don't think closing credit cards is a bad advice. Yes, without credit cards your FICO score will take hit. But, unless you really keep borrowing and paying them the hit will be there anyway. I don't think a barely used credit card will lift your FICO a lot. FICO score has several components. Major part of it is based on how much you borrow and how promptly you pay back. Unless you are keen on maintaining high FICO score and about to do some big purchase where FICO score will be a key factor, don't worry about it.

Keeping credit cards open may bring back old habits Otherwise enjoy the debt free life and kiss good bye to credit cards. You will be much happier.

Bheem

[TurnDebtIntoDebt]

I agree with the order of how you are going to pay off debt. If you want to keep a credit card, do you have a need for it? If you don't have a need, which means have adequate savings, then cut up the cards. You don't necessarily have to close them. Closing a lot of accounts at once will actually harm your credit score. 15% of your score is measured by the length of your relationship with your creditor.

[anonymous_saver]

Radiance, I would close the cards in which you owe the balance. I believe they will let you do that and then you would work on paying them off. Then keep the master card as your one and only credit card, no need to have more than one.

Sorry to say it, but this is bad advice. Don't close the cards (closing the Mastercard was a good chioce though, b/c like you said, there was an annual fee). Closing your other CC would effect your FICO score negatively. It doesn't hurt you to have it open with a zero balance.

Once everything is paid off I'd use all of the CC on a rotating basis. One time a month that you can easily pay off. This way the cards will stay active and won't be closed by the CC companies. Again, having this history will help your FICO score stay high.

[lovcom]

But that might be the "good" type of debt and does not really count like CC debt ;-)