What is the best way to get out of debt?

[amastewa93]

I have some petty debt (less than $500 on a credit card) and one larger student loan. I am currently paying $50 a month on the credit card (double the minimum) and I am beginning payments this month on my student loan ($260 a month for the rest of my life).

This plan will probably work for me, but what do you all think is the best way to get our of debt?

[disneysteve]

I have some petty debt (less than $500 on a credit card) and one larger student loan. I am currently paying $50 a month on the credit card (double the minimum) and I am beginning payments this month on my student loan ($260 a month for the rest of my life).

This plan will probably work for me, but what do you all think is the best way to get our of debt?

The best way is to slash your budget to the bone and throw every extra penny you can at the debt until its gone.

If you post your budget, we can help point out places to trim spending to retire the debt faster.

What's the deal with the student loan? I assume you were joking about paying for the rest of your life. It may feel that way but it's not.

[Jluke]

Manage debt wisely - don't take on too much debt. If you don't have the cash to pay for it, you really need to think about putting off the purchase, if possible.

For credit cards, people need to get out of the minimum payment mindset. Pay it off in entirety each month. That is a great habit to get into and with a rewards credit card you can actually make money. I got $600 in rewards last year just for using my credit card.

For debt, you need an amortization schedule. Play around with different payment options to determine your payoff.

To determine a monthly payment, you could take the total amount owed and divide it by the number of months you want to take to pay it off (obviously with interest it won't be exact, but would get you off to a good start). For instance, my 0% loan was down to $7000. I decided I want to pay it off in 35 months, so $200/month instead of the required $150.

Like Disney Steve said, when you have debt your main goal is to get rid of it and any extra $$ should be put towards the debt. Lump sums on debt can really help.

[FLA]

For credit cards, people need to get out of the minimum payment mindset. Pay it off in entirety each month. That is a great habit to get into and with a rewards credit card you can actually make money. I got $600 in rewards last year just for using my credit card.

Exactly this. And live below your means, no matter how low that may be. You'll always have debt and little savings if you don't live on less than you earn.

[TinaJ]

Most credit card companies compound interest daily. Instead of paying $50 a month, pay $25 twice a month or $10 5 times a month. You will save interest while making the same monthly payment.

[PhilDanley]

Budget is your Key

Hello. If you have a budget of your income and expenses then you'll be able to create a plan. You may find some expenses that you can live without and you might come up with a way to make some extra income. But you need the hard data from a detailed budget to get your plan.

[amastewa93]

Right now, I bring in about $3,000 a month (not including my fiancé and his income). My credit card debt, as I said is less than $500. I have been paying $50 a month to pay it down.

The $260 a month for my student loan will be for ten years (I came out of college with $24,000 in debt and after interest I will end up paying around $26,000).

My other bills: Internet ($60 I have to have for work, but am able to write it off on taxes), car insurance ($65), Adobe Creative Cloud ($45 same with Internet), Netflix ($9), gym ($30), cell phone ($50)

Currently, we are staying with my dad and his wife, so we are progressively trying to save money while also paying any debt. After college, my fiancé had a job opportunity here, and he took it. We have been living there for a few months now, but are also saving to move out (we will need furniture, deposits and emergency savings before we move).

Budgeting is definitely the answer. Our first few months here, my dad and his wife have urged us to go out and have fun (and we have), but it is time to buckle down.

[FLA]

am I missing something? because it seems like you have enough left to just pay off that $500, why have it hanging around collecting interest?

[Petunia 100]

Most credit card companies compound interest daily. Instead of paying $50 a month, pay $25 twice a month or $10 5 times a month. You will save interest while making the same monthly payment.

Careful with this. What saves the most interest is paying down your balance as soon as you can. If you have the $50 on hand, you do not save money by paying $25 now and waiting two weeks to pay the other $25. However, if you have $25 on hand now, and you choose to pay it now rather than waiting two more weeks when you can pay $50, you do save money.

[disneysteve]

I bring in about $3,000 a month

$260 student loan
Internet $60
car insurance $65
Adobe Creative Cloud $45
Netflix $9
gym $30
cell phone $50

am I missing something? because it seems like you have enough left to just pay off that $500, why have it hanging around collecting interest?

OP, you've only listed expenses of $519 from an income of $3,000. Where is the other $2,481 going? I realize you've left out things like food, personal care items, clothing, gas, auto maintenance and registration, etc. Still, it doesn't sound like you're spending anywhere near what you earn so why keep a $500 credit card bill around?

[clatoden99]

Pay off your highest interest loans first.

Relentlessly cut spending.

When the high interest loans are paid, take care of the lower interest loans.

Continue to cut costs & save.

Rethink your position on money and spending. What can you do to ensure a bright future?

Create a savings account and focus on prosperity.

[asoloans]

I agree with a poster though,just keep throwing everything you be got at the debt till its settled and gone..