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    How to pay off debt?

    I will be getting a large tax return and extra money from a payroll issue. Our home also flooded and due to a number of events, we still have to finish that too.

    Is it feasible to pay off 30,000 of cc and unsecured loan debt? Then get a low interest rate bank loan to cover finishing the remodel? It is about 11 k to finish and another 15k to finish the kitchen. It is a construction zone so it has to be done. No real time to save up for it. I was thinking a loan for the 11 and then save for the kitchen to be done. Any thoughts?

    #2
    The 30k debt seems like an emergency so yes pay that off if you can.

    Anything is possible with the right income, right amount of savings, and good credit.

    So what does your financial picture look like from an asset perspective?

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      #3
      Welcome to SA. We're a diverse bunch but we really care about doing a good job of caring for money and assets.

      I'm perplexed, kitchen and bathrm are the two critical rooms needed to function adequately. What areas are you prioritizing? What is the rational?

      What will eventually be reimbursed by one of the flood damage programs? Is insurance covering any of the named damages like sewer back up etc by any one of flood resultant events ? Were $ 33K CC + loan entirely a result of flood remediation? Would be more accurate to acknowledge some choices/costs relate to updates/upgrades?

      While all this gets sorted, I hope you have CC on a 0% promotion card if you feel the balance can be paid in full with tax refund + pay roll. What interest rate for personal loan?

      For the short term, can you get the family onboard to accept frugal choices and delayed spending until you have a written plan to get away from serious debt? If it's any help, we choose February as our super frugal month. We promise to be mindful of every dollar spent, actually noting it on an app on our phones.

      We call it 'giving every dollar a job.' We actually assign a sum to most spending categories and once that sum is spent, spending in that category ceases! Can you imagine? If I drive more than I expect, I can get perilously close to running out of money to buy gas.
      Last edited by snafu; 02-02-2018, 10:42 AM.

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        #4
        Our insurance covered some of it and we did add to it. If everything would have stayed on track, it would have been done already and we would not be in as much debt. That is the short story. Obviously, my mistake was using a credit card instead of a bank loan to finish. I see now how risky and awful it was to do what we did. My husbands job is stable but who can predict when something will not work?

        Our kitchen is serviceable enough to wait 6 months or so. We have walls taken down and need to have our ceilings and walls fixed. That is around 4k.


        My plan is pay off debt. And then finish with cash what i can and either find a zero interest credit card or lower interest bank loan for kitchen

        I am somewhat frugal already. Im not willing to give up more than i have. Im hoping with what we have saved from no payments, that we will be able to save for a decent kitchen.

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          #5
          If your primary goal is to pay off debt, typical order starts with highest interest rate. Others use the 'snowball' theme, having listed debts from smallest sum to largest.

          Every 'regular' bill [mortgage, insurance, heat, electric, phone, food] gets paid at least two business days in advance of due date, next group of bills are only paid the sum called 'minimum due' by due date to avoid late fees/penalties. All focus is on lowest balance debt. Every dollar that can be scrounged goes to that specific bill. Some people take over time or a second job short term, to rid themselves of the pressure of debt.

          Any cost avoidance, sale savings, meal planning spending reduction go to reduce that targeted balance. Items identified as not used, not needed are sold on local FB or Craigslist, to reduce that lowest balance faster. Once that balance is $ Zero, Win is acknowledged, focus shifts to the next lowest balance owed. Every win builds momentum and debt melts like snow. There is so much energy and attention used to pay, a more modest amount is expended on needs.

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            #6
            I have some friends that got flooded and are just getting back in their homes now. God Bless you and your family.

            Be real careful as you finish up the repairs. Its so easy to add that extra upgrade, especially if your catching the slack on a credit card (bad idea IMO). Consider not using the card and doing only what you can on cash flow. Then saving up and making it perfect later. It will take a little longer and cost a little more, but eliminates the risk of adding extra debt or using up your emergency fund.

            We saved for a back yard patio remodel last year and the contractor did poor work and then didn't finish. Wife and I had to live with a half finished patio till now and I'm slowly fixing the problems and completing the job. It took a little more pain, but we avoided any debt and kept our emergency fund. You know as soon as you splurge on the nice granite and run up a bunch of debt, life will hit you with a job loss or illness and you will be in big trouble.

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              #7
              We are going to try to avoid the temptation to go too crazy. We want to move in a few years and some upgrades are necessary to move. I think it will be less difficult if we hold firm in our resolve to pay off our debt and then finish projects.

              Unfortuneately, it is getting to be the norm living in a constructiom zone.

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                #8
                I'm sorry, but I am confused about the whole issue of credit card pay offs, flood, flood insurance? Finishing constructions, etc. It is like coming into a movie at the half way point.

                For those of us a bit slower on the uptake, can you give us a more of time line of what has been happening and what needs to happen. And where are you living now if you hope to move in in a few years? Like I said I am confused.

                Can't offer any advice unless I know the issues.
                Gailete
                http://www.MoonwishesSewingandCrafts.com

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