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    What do i pay off next?

    Hello everybody!

    For the first time I'm a bit confused where to continue paying my debt. After I pay off my 2.4k on my Citi CC. Should I just make huge payments to my Chase Slate...or should I just pay the average of the balance/(remaining months at 0%) each month? And then spend the remainder of that monthly income on my 6.8% Student loans? So I can take advantage of all the time possible at 0%. I hope that makes sense... I take home approx 3500-4500 depending on how much OT I work. I've paid off 5000 of credit card debt in the last 5 months but I still have 11.7k. Recently I applied for a Chase slate so I could take advantage of a 0% fee balance transfer. All advice would be greatly appreciated. Heres my debt/monthly expenses.

    Name , Balance , Min , % APR

    Probation 810, 50 , 0
    Citi 2429.5 , 40 , 14.24
    Chase Slate 9264.4 , unknown , 0 for 15 months
    Nelnet Student loans 19,432.5 , 282.62 , 5.924avg (10,000@6.8%, 5k @ 5.25%, 4k @4.25)
    ACS Student loans 14,038.7 , 223.9 , 4.066avg (5k @ 6.8%, 8.75k @ 2.3%)
    BOA Car 13,185.85 , 359.52, 5.14
    pacific power 112
    US cellular 83.07
    Myfico 14.95
    Charter 29.99
    Progressive 73.17
    Rent 475.00

    TOTAL is 59202.53, each month my min payment is 1744.91 + whatever the minimum for my new chase slate CC

    Also I limit myself to 500 dollars a month for food, drinks, clothing... basically everything not on this list.
    Last edited by kabhold; 04-19-2014, 09:38 PM.

    #2
    What is the probation item? If that is only $810 total, I would recommend paying that off as soon as possible. That is a quick $50 per month that you free up. Pay this off first and foremost, then follow what I recommend below. There is no reason to keep a payment like this over your head when you can just wipe it out very quickly.

    What purpose is the MyFICO subscription? Why do you need access to your credit report and score on an on going basis? You can check your credit report for free once per year from each of the three credit bureaus through annualcreditreport.com. As for FICO, there really is not a reason to check that every month or even every year. If you care so much about your credit score, then just understand that as long as you do things that help your credit score, you do not need to watch over it. So that frees up an $14.95 per month.

    As for paying off your debts...

    There are a few different methods that you could implement. Here is what I would recommend:

    I would go after the Citi first. It is the smallest pay-off balance and the highest interest rate.

    Then, I would go after the Chase card. The reason why is your 0% will only last for 15 months. After that, you will have an effective APR that is more than likely MUCH higher than your student loans. Your goal should be to pay off that balance before the 15 months is up.

    Next, I would go after the car loan. The way I look at things, car loans are inherently more risky than student loans. There is a risk of repo which you do not face with student loans. Go after the student loans AFTER the car loan, regardless of interest rates.

    After that, focus on the student loans by attacking the smaller balance loans, then the higher balance loans.

    Avoid going back into debt. There is no reason to pay off debt if you are just going to go back in. So whatever caused you to rack up those credit card debts - make sure that does not happen again! Build an emergency fund, only buy things when you can afford them, and stop carrying credit card balances.

    You should be able to fight your way through this fairly quickly. We are loosely following Dave Ramsey's debt snowball methodology for the most part, although interest rates also tend to make sense too in this case. Make sure that you pay minimums on all other debts that you are not focusing on at any particular time.

    Do you have an emergency fund? You should have about $2,000 to $3,000 set aside before you start attacking your debts just as a precaution.
    Check out my new website at www.payczech.com !

    Comment


      #3
      I have a diffeent approach to this than dczech09.

      I always recommend one of 2 approaches: (a) pay off the balance with the highest interest rate first, or (b) pay off the smallest balance first while making minimum payments on everything else.

      Option A saves you the most money in interest you will not have to pay. Option B creates the now-famous "payment snowballing effect" by sequentially freeing up more and more of your money to throw at your next lowest balance debt.

      Either way, let any zero percent interest balances you might have run as long as they will run, making minimum payments on them. Believe me, if you have gotten a zero-percent offer you are very likely to get future zero-percent offers in time to roll over any balances that might have a soon-to-spike interest rate.

      Good luck!
      Retired To Win
      I blog weekly on frugal living, personal finance & earlier retirement at:
      retiredtowin.com
      making the most of my time and my money

      Comment


        #4
        Originally posted by Retired To Win View Post
        Either way, let any zero percent interest balances you might have run as long as they will run, making minimum payments on them. Believe me, if you have gotten a zero-percent offer you are very likely to get future zero-percent offers in time to roll over any balances that might have a soon-to-spike interest rate.
        I agree and disagree with this. Yes, the 0% offers are sweet as they give you time to avoid finance charges. However, if you are paying a 3% balance transfer fee each time your do a balance transfer, are you really paying 0%? The fees are low, but they are also flat, as opposed to typical credit which have reduced balances which reduces effective interest over time.

        Also, the amount of money one saves by doing the balance transfers is trumped by simply paying off the debt. If the OPs goal is to pay off debt, they are much better off focusing on paying off debt, not necessarily trying to save on interest. The savings on interest is sweet, but is negated over time.

        You cannot borrow your way out of debt. The only way to get out of debt is to pay it off.
        Check out my new website at www.payczech.com !

        Comment


          #5
          Thanks for replying!

          Some things I should say: I'm really not that worried about having my car repoed. Never ever been late on a bill. Ever. And even if I lose my job I can have another within an hour at the same pay.

          Also the credit card debt was for plastic surgery. I HAD a congenital facial disfiguration. I look normal now so it was worth the 20,000. Hell I would've paid double. Anyways, I don't have spending issues. So I'm not worried about getting back into debt.

          The Chase slate had a 0% fee. No charge to balance the transfer at all. BUT it was the ONLY card I could find that would allow this.....

          I haven't paid off my probation because it is interest free, so I've been putting all my money into the highest interest.

          Very good answers, but after I pay off my Citi I'm still not sure what to pay off next.

          I think I will be getting rid of Myfico though. Even though I do love it's service.
          Last edited by kabhold; 04-20-2014, 08:40 PM.

          Comment


            #6
            Also I was thinking about getting rid of my 6.8% student loans next, but after the tax deduction it's actually 5.1%... So maybe the car is the best way to go.

            Comment


              #7
              Originally posted by kabhold View Post
              Hello everybody!

              For the first time I'm a bit confused where to continue paying my debt. After I pay off my 2.4k on my Citi CC. Should I just make huge payments to my Chase Slate...or should I just pay the average of the balance/(remaining months at 0%) each month? And then spend the remainder of that monthly income on my 6.8% Student loans? So I can take advantage of all the time possible at 0%. I hope that makes sense... I take home approx 3500-4500 depending on how much OT I work. I've paid off 5000 of credit card debt in the last 5 months but I still have 11.7k. Recently I applied for a Chase slate so I could take advantage of a 0% fee balance transfer. All advice would be greatly appreciated. Heres my debt/monthly expenses.

              Name , Balance , Min , % APR

              Probation 810, 50 , 0
              Citi 2429.5 , 40 , 14.24
              Chase Slate 9264.4 , unknown , 0 for 15 months
              Nelnet Student loans 19,432.5 , 282.62 , 5.924avg (10,000@6.8%, 5k @ 5.25%, 4k @4.25)
              ACS Student loans 14,038.7 , 223.9 , 4.066avg (5k @ 6.8%, 8.75k @ 2.3%)
              BOA Car 13,185.85 , 359.52, 5.14
              pacific power 112
              US cellular 83.07
              Myfico 14.95
              Charter 29.99
              Progressive 73.17
              Rent 475.00

              TOTAL is 59202.53, each month my min payment is 1744.91 + whatever the minimum for my new chase slate CC

              Also I limit myself to 500 dollars a month for food, drinks, clothing... basically everything not on this list.
              I had my own CC debt mess three years ago. I approached it by making large payments on the highest APR CC, and making minimum payments on all others. In your situation, it depends on how high that chase slate rate jumps up after the intro period is over.

              But, I would assume that it will jump up to 15 or 19 or 22%.

              So, probably the way I would approach it is to knock out the Citi, then concentrate on the chase slate.

              As someone else mentioned, you could play the game where you are sort of perpetually transferring it to another 0% offer, and continue to make minimum payments until it is paid off, but you will likely make 3 or 4% transfer fee payments each time. That gets tiring after a while.

              Really, none of your debts, aside from the Citi are outrageous. So, yeah, I would concentrate on the chase slate after the Citi.

              Good luck!

              Comment


                #8
                I understand the study, but i have no problem with motivation. Absolutely no reason to pay off a 0% interest debt early. It actually costs you money if you consider inflation

                Comment


                  #9
                  Originally posted by kabhold View Post
                  I understand the study, but i have no problem with motivation. Absolutely no reason to pay off a 0% interest debt early. It actually costs you money if you consider inflation
                  It makes sense to pay off a 0% credit card before the 0% period is over. If and when that 0% promotion ends, an APR will apply. Usually, 0% promo cards carry an abnormally high APR (higher than what you could otherwise qualify for).

                  The OP could transfer to a new 0% at that time, but balance transfers usually cost 3% or so. The OP lucked out with this first card having no balance transfer fee. That deal is EXTREMELY unusual, so I am assuming the APR on that card is just crazy...

                  To reiterate what I already said, I would recommend....

                  Emergency fund (for emergency expenses, not necessarily job loss)
                  Probation
                  Citi
                  Chase
                  Car loan (even if repo is not a risk, pay it off)
                  Student loans (smallest balance to highest balance)
                  Check out my new website at www.payczech.com !

                  Comment


                    #10
                    Originally posted by kabhold View Post
                    All advice would be greatly appreciated.
                    Looks like you make $3.5k to 4.5k a month. Your total monthly expenses are $1,744.91+ $500 = $2,344.91.

                    Some questions:
                    1. Is this your total monthly expenses and are you on a budget? Track your expenses using mint.com
                    2. Can you pay Progressive for your car insurance every 6 months? (You can get a 5% discount that way)
                    3. Have you taken advantage of the savings offer through progressive using their Snapshot discount? We got a 13% permanent discount by doing this.
                    4. $83.07 a month seems expensive for one cell phone. Who is your provider and when was the last time you updated your plan?
                    5. Do you have any money saved up in a savings account?

                    Agree getting rid of MyFico is a good idea. At $14.95 a month that’s over almost $180 a year that you could save and still get a free credit report once a year.

                    If those are your total expenses that should leave you about $1200 to $2200 extra a month to put towards your debt. Plus any other savings you shave off your current budget as mentioned above.
                    ~ Eagle

                    Comment


                      #11
                      Kabhold you do have a point about paying off a loan with 0% interest. The probation just keep making the minimum payments on. When does the Chase 0% interest for 15 months end?

                      Originally posted by Retired To Win View Post
                      I always recommend one of 2 approaches: (a) pay off the balance with the highest interest rate first, or (b) pay off the smallest balance first while making minimum payments on everything else.

                      Option A saves you the most money in interest you will not have to pay. Option B creates the now-famous "payment snowballing effect" by sequentially freeing up more and more of your money to throw at your next lowest balance debt.
                      Good stuff from Retired to Win here Kabhold... The highest interest method is often referred to as the "Avalanche" method of paying off debt. What would it look like in practice in your situation?

                      Lowest Balance Method (Debt Snowball)
                      Probation -- $810 at 0% Interest
                      Citi -- $2429.5 at 14.24% Interest
                      Nelnet SL 3 -- $4k at 4.25% interest
                      ACS SL 1 -- 5k at 6.8% Interest
                      Nelnet SL 2 -- $5k at 5.25% interest
                      ACS SL 2 -- 8.75k at 2.3% Interest
                      Chase Slate -- $9.264.4, 0% for 15 months
                      Nelnet SL 1 -- $10k at 6.8% interest
                      BOA Car -- $13,185.85 at 5.14% Interest

                      Or

                      Highest Interest Method (Avalanche)
                      Citi -- $2429.5 at 14.24% Interest
                      ACS SL 1 -- 5k at 6.8% Interest
                      Nelnet SL 1 -- $10k at 6.8% interest
                      Nelnet SL 2 -- $5k at 5.25% interest
                      BOA Car -- $13,185.85 at 5.14% Interest
                      Nelnet SL 3 -- $4k at 4.25% interest
                      ACS SL 2 -- 8.75k at 2.3% Interest
                      Chase Slate -- $9.264.4 0% for 15 months
                      Probation -- $810 at 0% Interest

                      Note: It really depends on when the Chase interest offer expires and if you are able to get another 0% offer as to where that account falls on these lists.

                      Hope this gets you started.
                      Last edited by Eagle; 04-22-2014, 06:54 AM. Reason: formatting
                      ~ Eagle

                      Comment


                        #12
                        I just got the Chase Slate card so i have about 14.75 months left at 0%. Ive gotten rid of the myfico. So that saves 14.95 a month. I called US cellular and my plan which costs 69.99 + tax (83.10 total) is better than any plan that they have currently. But hey that 15 dollars.

                        I'm going to pay off the Citi card next. Already made a $750 payment yesterday. That should only take 3-4 weeks to pay that off. So my plan is this: Pay exactly $661/mo to Chase slate. after 14 months that will pay off the balance. This will pay off the debt in time before the interest jumps to 12.99%. In the meantime whatever excess cash flow I have I will apply to my 6.8% Student loans. I figure in 14 months I can pay off at least 10,000 of that, if not the entire amount of the 6.8% loans (again, depending on the amount of OT)

                        The reason for paying off the chase Slate is peace of mind. I really don't wanna start juggling debt. It may not be the best route, but for my peace of mind... it is.
                        Last edited by kabhold; 04-23-2014, 08:50 AM.

                        Comment

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