how do I snowball here

[rusty2832]

Current Debt load:
Card 1 (V)- 1092.92 at 22.24%;
card 2 - (AE) 1654.71 at 13.99%;
Card 3 - (Dis) 1341.84 at 15.87%;
Card 4 - (V) 3653.30 at 13.99%
Card 5 - (Dis) 3773.66 at 3.9% through 1-2012 (a bal. transfer);
Card 6 (MC) - 1000.25 at zero % rate through 5-09 statement (which I plan to pay off by end of April).
Cookware Loan - 676.10 at 0% through 11-2009;
Card 7 - (MC) - 218.94 at 18.9% (which I pay off monthly);
Card 8 (V) 156.93 at 9.9% (which I pay off monthly);
Water Soft Loan - 2568.81 % 16.99% (pay $102.95 until early 2011);
HEq. Loan - 4744.83 at 6.99%;
House Loan - 51263.84 at 6.25% (orig. principal was $55000 in Feb2004)

I have a 401K account at work with soonersave at 4.65% in the SoonerSave Stable Value Fund, with a little over $11,000 in this account. I put in $25 a month and the State of Oklahoma matches the $25.

I have 15 years until I reach full retirement age at 67 to draw full soc security benefits. I have been a state employeed for almost 31 years.
The longer I keep on working the better the pension check will be.

Common sense tells me that I need to pay down my debt, stop charging nd live within my means. That is very hard to do.
Part of me would like to pay down the house princiipal enough to eliminate the PMI as the total house payment keeps going up every year due to hikes on insurance and property taxes yet I would have to pay down $11000 to pay off part of the house payment and pay off the home equity loan to get the PMI off.

This is my circumstances. I don't want to make the same mistake with this "gift" of money from my Dad's estate.

Previously I got $23,000 from my Dad's estate April of 2008, which I used $20,000 to pay down debt and the rest of it I put in savings; I worked a PT job last year and added that to savings; I paid off bills as they came in (like water/oge/ong/some small credit cards I always try to pay i full) and then reimbursed my MMI checking account where I placed this windfall at from my regular paycheck.

I have been using two cards, the MC1 with the low balances for food shopping at Braums and paying that off monthly rather than carry cash and then using the Amer. Express card as a line of credit in case of emergency.
(Yes, I know that it is not wise--some of what I have been charging on this AE card lately is not an emergency, yet I still do it, as I do have some money coming in down the road.)

I have about $1000 total counting all my saving accounts (ING account, BOA account, and 2 credit union saving accounts). I have two checking accounts, one a regular checking no interest and the extra MMI checking which draws interest once balance is over $2500.01, about .10% off from the current ING saving account rate. My credit union saving accounts run about 1.00% rate; and my BOA savings runs about about .20-.50% rate (and only requires a monthly deposit of any amount to avoid a service fee (so I may deposit a penny a month to avoid the monthly fee).

Upcoming monies coming in: early April 2009 a $3000 final settlement frommy Dad;s estate; a $3200 bonus check from my job in early June; plus a weejend PT job starting April 1st through Halloween with checks coming
in biweekly.
I wasted the first $20,000 from my late Dad as I have charged back about $8000 onto some of the credit cards I had initially paid off. I don't wish to make the same mistake with the $3000 final settlement forthcoming.

Today I received an offer, more tempting this time, of a new promotional 3.99% APR for new balance transfers lasting through Dec 2009. I am tempted to transfer one of my below debts to this one to eliminate interest being paid. Before I would do this I would pay off the MC with the $1000 balance on it and then do the above transfer to this card from one of the above debts and then pay that off before December 2009 to save on interest.

I keep on getting offers for cash advances, balance transfers, etc and so far I have cut them up in small pieces and eliminated all chances of using them.

Part of me would like to contribute to my work 401K, and up the contribution to $500 a month and pay me back with the money that is supposed to come from my Dad's estate and then after a year, switch the contribution back to $25 a month as normal; and then keep the June 2009 bonus from work and PT checks in savings and aplly part of that to pay down on debt.

I don't know what to do. Yet I know that no one can make that decision for me. So far I have only been charging on two cards I carry and have left the others alone and trying to pay those off. The debt that I have is due to me and part of me doesn't feel right about using Dad's money to pay this off, and that I should invest this unexpected gift and use it to my real advantage, maybe for retirement.

I haven't even though about opening up an ROth IRA or other type account. It is all I can do just to manage all this.

I am making my minium payments and have even made extra on some of them. I have money to cover my bills and to buy food. I hope someone can point me in the right direction. Canceling the credit card accounts is not an option at this time--I am using my will power on all but two to not charge on them.

Even if your bunch yells me, I will try to take it. - Amy

[puck36]

This is how I would list your debts.

Card 8 (V) 156.93
Card 7 - (MC) - 218.94
Cookware Loan - 676.10
Card 6 (MC) - 1000.25
Card 1 (V)- 1092.92
Card 3 - (Dis) 1341.84
card 2 - (AE) 1654.71
Water Soft Loan - 2568.81
Card 4 - (V) 3653.30
Card 5 - (Dis) 3773.66
HEq. Loan - 4744.83
House Loan - 51263.84

Dave Ramsey does a debt snowball that lists the debt smallest amount to largest amount. He does not care about the % rate. You start by making the minimum payments on all the debts except for the smallest one. You take the smallest payment and add it to any extra money you and to pay that one off. Then you take that payment + extra money + the payment on the next smallest debt and pay that off. Then continue with the next debt and so on.

Dave Ramsey has a plan that works for everyone that I know. It’s called the Baby Steps.

1. $1,0000 to start “Emergency Fund”
2. Pay off all debt using the “Debt Snowball” – except the house
3. 3-6 month expenses in savings – Fully funded Emergency Fund
4. Invest 15% of household income in Roth IRA’s and prêt-tax retirement
5. Kids College Funding
6. Pay off home early
7. Build wealth and give

You can find more information about the Baby Steps on DaveRamsey.com or by reading Dave Ramsey’s book The Total Money Makeover.

His book really changed my life. I have been debt free, but the house, going on 3 years now.

[Ima saver]

That is good advice. I too have been debt free (including my house) for years. I do have a card, but I pay it in full each month out of my budget. I don't go shopping unless I really need something necessary.

[kork13]

Common sense tells me that I need to pay down my debt, stop charging and live within my means. That is very hard to do.

I'll be bluntly honest with you.... So long as you accept this way of thinking for yourself, you will never (repeat, NEVER) get yourself out of debt. Do you like the idea of being in debt up to your eyeballs to your dying day? Unless you fix your overall outlook on money, that's what you have to look forward to.

I wasted the first $20,000 from my late Dad as I have charged back about $8000 onto some of the credit cards I had initially paid off.

This tells us that your spending is madly out of control. Snowballing your current debts will do you no good if you will only charge more back onto your credit cards. You need to fundamentally change your spending habits.

Before you can get any worthwhile advice, we need you to post the whole picture. The debts are a start, but we also need your income, and also what your monthly expenses are. Do you know where your money goes every month?

That's the most important thing you can do right now--we can help you find ways to cut your expenses down, which will free up the money that you need to pay down your debts.

I'm very sorry that I've been so harsh, but you also need to be honest with yourself. You are quickly approaching retirement, yet have nearly $21k in consumer debt (plus a mortgage), over half of which is charging you more than 10% interest for every day that you hang onto it. We're happy to help you, but you also have to be willing and able to actually take our advice and change how you're living right now.

Post your income, what assets you have, and lay out all of your expenses, big and small. Once you do that, we can help you chip away at them and get your finances in order.

[TBH]

Canceling the credit card accounts is not an option at this time--I am using my will power on all but two to not charge on them.

Why can't you cancel cards as you pay them off? Will power is not enough.

I think a big part of your problem is that your finances are too complicated. You are driving yourself nuts keeping track of a million different cards different savings accounts, etc.

I think you need to cut up ALL your cards except one card that you use for day-to-day expenses and pay off in full at the end of each month. Then, as you get each card paid off, close the account.

Don't even think about a ROTH IRA right now. You can get help on here with your budget if you post your income and expenses. People can help you see ways to cut back, and then you can start tackling that debt in earnest.

Good luck. You can do this. But it does sound like you have a spending problem and need to address that before you can seriously work on getting out of debt.

[disneysteve]

it does sound like you have a spending problem and need to address that before you can seriously work on getting out of debt.

I agree. You are carrying 12 different loans including your home. That's got to stop. Stop using ALL of your CCs, even if you can pay one off every month. Go to cash-only until you climb out of the hole you've dug for yourself living on borrowed money.

Review your spending (and post it here) and cut out all non-necessities. Take every penny you free up and apply it toward the debt with the highest interest (card 1). When that's gone, move on to the next highest, and so on, until they are all gone.

You MUST control your spending and living beyond your means if you ever hope to correct this.

[creditcardfree]

You MUST control your spending and living beyond your means if you ever hope to correct this.

I agree as well.

Here's a link to a snowball calculator. I have another one listed on the sidebar of my blog. They are both free.

Doing these calculations may help you see how they could be paid off. I'm sure you are quite overwhelmed right now. Once you see what needs to be done, you will need to make some changes to your spending habits. No more charging on credit cards. None!!

[asmom]

1. The good news is that you can pay off all of your debts except the mortgage and the HEL by next year.

2. Forget about doing a balance transfer or cash advance or anything like that. Your situation is complicated enough as it is.

3. You have $6200 dollars coming in, you should pay off your debts as follows:

Card 1 - 1092.92 at 22.24%;
Card 3 - (Dis) 1341.84 at 15.87%;
Card 6 (MC) - 1000.25
Water Soft Loan - 2568.81 % 16.99%
_______________________________
Total: $6003.82


With the remaining $196.18 + the minimum payments you will make between now and then you should then easily able to pay off:

Cookware loan: $676.10


4. Now you have decreased the no. of people you owe by almost half in less than 3 months. The next step is to payoff the remainder. You didn't post your minimum payments but I am guessing you have freed at least $300/month that you were paying the others. Roll the $300 over, add in what you are making from your part-time job and pay off:

Card 4 - 3653.30 at 13.99%.

You should be able to achieve this by Christmas.

Roll that amount over and payoff:

card 2 - 1654.71 at 13.99%;

This can be done April 2010. By the end of the year, you can finish off:

Card 5 - (Dis) 3773.66 at 3.9%

I chose it instead of the HEL because even though the interest rate is lower, it is tax deductible.


6 months into 2011, you can polish off the HEL and then your mortgage payment will go down because you have increased equity.

5. The others are right. You do have a spending problem and unless you deal with that, then paying off all these loans is for nothing because you are going to end up in the same place again. And 15 years until retirement is not that far away.

6. If you build up your savings, you won't need to use your CC for emergencies. $1000 is not enough but you can fix that after you reduce this debt load. And speaking of that, you have too many savings accounts. Get rid of all but one especially the BOA, it is too much hassle to try to make a transaction every month just to avoid a fee especially when you don't have to do that for other banks.

7. Using this money to pay off debt is the best thing you can do for yourself with your Dad's money right now. It's to your greatest advantage.

8. Post your income and expenses and let the others see if you can free up some more money. You will probably be able to pay off the debt even sooner. Good luck.

[creditcardfree]

I like the plan you have proposed, asmom!

[TBH]

I like the plan you have proposed, asmom!

Me, too.

The OP can totally do this. I'm optimistic for her, especially if she can quit the credit card spending cold turkey.

[rusty2832]

I digested some of the other comments the past few days. Unless I cannot charge, I would agree with the poster that said snowballing would be useless unless I modify my habits. I do have a spending problem, similar to the addiction that smokers have. I relooked at my debts and budget and did make a few moves prior to coming back to here to read any newer postings. I transferred $900 over from savings to checking and have reserved $90 to cover a hair cut/weave for Thursday to get ready for my parttime job that starts this coming weekend, and reserved $168 to cover Federal Taxes on April 15 and reserved $86 to cover State taxes due on April 15th, and the rest of it is untouched as of yet and until I get paid that is planned to be the emergency fund until I get paid monthly on March 31st.

The hair is required expense as I have to have good hair since I am working with younger kids/colllege kids at the amusement park. I had forgotten about the taxes and did rough figures on those yesterday so I earmarked them so I would have the money. I am using money here that is already in savings, so none of the upcoming $6,000 is involved here.

I just read the proposed plan by Asmom which actually looks like something that I could feasibly pull off, if I can go cold turkey, once I get the $6000 from my Dad's estate.

Even though the HEL rate is low, I don't have enough total deductions that I can deduct it on taxes, so the Card 5-(Dis) 3773.66 at 3.9% that expires Jan 2012, the result from a balance transfer of former debt, that would be the best one to pay off at that point rather than the HEL.

Eliminating the BOA saving account would be a good idea. I have kept it just because I have had it so long. I may cancel the MMI checking account at the credit union which is .10% rate less than ING direct online savings account. The ING account has interest with no minimum balance requirement unlike the MMI account that has a $2501. minimum to be met before a $10 service fee is imposed. I have missed that one for 4-5 months now.

Having one online savings account at ING and the local credit union one saving account and one regular checking account would streamline it better.

I will digest the latest comments and see what I can do prior to regrouping my expenses all together here I have to take some of the baby steps mentioned by Asmom here and have some success first before doing anything else. I will try to check in periodically, even if it gets badder.

[disneysteve]

have reserved $90 to cover a hair cut/weave for Thursday to get ready for my parttime job that starts this coming weekend

The hair is required expense as I have to have good hair since I am working with younger kids/colllege kids at the amusement park.

You have to have a $90 haircut for a part-time job at an amusement park? I'd love to hear your explanation for that argument. I'm a physician and cut my own hair with an electric clipper that I bought for $15 about 4 years ago. I've never spent more than $20 on a haircut in my life.

[skydivingchic]

"The hair is required expense as I have to have good hair since I am working with younger kids/colllege kids at the amusement park."

This is going to sound harsh, but the above is exactly the type of reasoning that needs to change. I have a very hard time believing that "good hair" is some type of job requirement for part time work at an amusement park. Good hair does not require $90 visits to a salon. I consistently get compliments on my hair from random people, including hairdressers, and I might spend $90 total a year on hair care (including shampoo, conditioner, and trims).

I'll also echo what others have said. You must learn to control your spending before paying off the CCs. If not, you'll just be in the same position in another year or two. I know this from personal experience.

The best thing you can do for yourself is start tracking every single penny you spend for a few months. Then come back here, post the results, and get some help setting up a budget and figuring out where you can cut. Without an idea of where your money is currently going, it is extremely difficult to make any headway. Seeing it on paper helps tremendously in giving yourself perspective.

After you've got the spending under control, asmom put together a great plan for you to follow. Cancel the CCs immediately after they are paid off (except perhaps one that gets frozen in a block of ice or put somewhere difficult to get to) - you've proven to yourself that you can't handle them responsibly, so take away the temptation. After things have been paid off for a year or two and you've consistently lived within a budget, then you can consider whether or not you can responsibly handle another CC.

[boosami]

You have to have a $90 haircut for a part-time job at an amusement park?

I need a Ferrari so I can drive to weekend sales at Goodwill...

[maat55]

I agree with steve, STOP using all cards until you are out of debt. Cut your budget to the bone(includes 90 dollar haircuts).

List your debts smallest to largest or highest interest to lowest, pay your minimums, then attack them in order with all extra funds. I suggest smallest to largest for motivation.

Your mentallity towards debt and spending, needs to change, read some books on personal finance, I suggest these:

The Total Money Makeover by Dave Ramsey
The Automatic Millionaire by David Bach
The Millionaire Next Door by Stanley/Danko