Posted: 3/28/2015 1:17:32 AM EDT
|
So lets just assume that I had a compelling reason to get into some credit card debt. I did; the consequences otherwise would have been dire, but let's not get into that, what's done is done.
Here's the situation: Card 1: Balance $6,055.62 Card 2: Balance $3,809.89 Unexpected windfall: ~$3000 Savings: Not good. No way I have enough emergency funds to make it until I found a new job in case things go upside down. Other finances are under control, mortgage will be paid off in another 6 years, etc. (11 years total since inception) I am paying roughly 3 times the minimum on each of the cards each month without much pain, but more would start to cut into getting by. They are going down: I'm paying faster than than interest is accumulating. So with all that in mind, where should I put the $3000? Pay one card down a lot? Pay each down a bit? Build up the emergency fund? Buy stocks? Hookers and blow? Let's hear some options... 
|
|
Drop the 3 grand on the lowest balance, pay the minimum on the largest balance, and apply the extra to the smaller balance. A couple of months and it will be knocked out. You will also feel successful in knocking out on of your credit cards and motivated to knock out the next one. Then apply what you were paying on the smallest to the largest. In the past 6 months I have paid off my second mortgage, paid off my car, paid off a long standing credit card debt, knocked another credit card down to a zero balance, and I'm getting ready to knock another credit card out. All because I simply decided to stop spending and applying any extra money to debt payments. I should have done this 20 year ago.  But at least I'm taking care of it now. |
|
Quoted:
those offers come with a 4% transfer fee which is prepaid interest Quoted:
Quoted:
Get a 0% offer from another card(s) and transfer the balances. Pay minimum. Repeat cycle at the end of promotional period. Profit. those offers come with a 4% transfer fee which is prepaid interest 4% for a year is a steal, when you compare it to other rates
It is usually 3% |
|
Quoted:
Have $1,000 for emergency fund. Rest goes towards lowest card. This. 1K as bare minimum emergency fund, 2K to lowest credit card balance. Then, pay off the remaining $1.8K asap. Work extra, sell a gun, whore yourself out, whatever it takes. Then, obviously, toss everything at the bigger credit card debt. While you're doing this, pay the minimum house note you can. No curtailment. If you can balance transfer to a 0% card, that may help but be forewarned that most charge at least a 3-4% BT fee. Upfront. With discipline and sacrifice, you may be able to pay everything down quickly without bothering. |
So some quick sums produce the following scenario:
So, then, looking a lot better immediately and about 2 years to no CC debt. Until the next emergency ;) |
|
Quoted:
Work extra Quoted:
Work extra Can't really do much more of this: 3 kids, full time job on salary and also back in school ! Working extra is what produced the 3G windfall (bonus after taxes and a large medical expense) Quoted:
pay the minimum house note you can. Doing this, it was an 11 yr note to start. It would be very difficult to change this. |
|
Quoted:
I'm not giving any advice until you tell us about this mysterious dire need to run up a credit card bill and then how you came about a $3000 "windfall"  I'm not comfortable going very deep into the mysterious situation. Let's just say I paid a debt to an "entity other than a financial institution." Maybe think of it as weregild. That's what I do if I want to feel all dramatic and what not. The "windfall", on the other hand, is not mysterious at all: simply a bonus at work. I never count on such things and it materialized. |
|
Who gives a shit? It's just some credit card debt, and relative to many, not even very much. You get to ask those questions if you're going to offer him a loan or a gift to pay on the debt.
Quoted:
I'm not giving any advice until you tell us about this mysterious dire need to run up a credit card bill and then how you came about a $3000 "windfall" |
|
Dude, this is eaaaaasy. Follow along:
1: go here, and pick the best balance transfer deal you can find...and transfer the entire balance to the new card. linky Chase Slate offers 0% for 15 months and no transfer fee. 2: dedicate the entire windfall to paying down the new card 3: Now, take whatever balance is left, divide it by the number of paydays you'll have relative to the number of months you have at 0% on the promotional balance 4. Plug that number into your online billpay, with automatic payments of the size calculated in step 3 and a frequency that matches your paydays such that the money is "gone" before you know it on payday...and you have the entire balance paid off by the time the promo rate period ends 5: sit back and enjoy the debt-free-edness. 6. start your emergency fund with any $ you have left over after the billpay goes out. |
|
Quoted:
Dude, this is eaaaaasy. Follow along: 1: go here, and pick the best balance transfer deal you can find...and transfer the entire balance to the new card. linky Chase Slate offers 0% for 15 months and no transfer fee. 2: dedicate the entire windfall to paying down the new card 3: Now, take whatever balance is left, divide it by the number of paydays you'll have relative to the number of months you have at 0% on the promotional balance 4. Plug that number into your online billpay, with automatic payments of the size calculated in step 3 and a frequency that matches your paydays such that the money is "gone" before you know it on payday...and you have the entire balance paid off by the time the promo rate period ends 5: sit back and enjoy the debt-free-edness. 6. start your emergency fund with any $ you have left over after the billpay goes out. Ding ding ding |
|
A friend of mine was in a similar situation back in the day. She combined her debt into one "zero percent" balance transfer (3% fee) and budgeted to get it paid off over the 18 month offer period.
It's always good to maintain an emergency fund. A six month emergency fund is not unreasonable. |
|
Quoted:
Get out of debt. If you need emergency money you'll have the credit, except you'll save money on interest. Though this is often true, CC companies have started closing accounts when you have a high balance and then do a sudden pay off. I am not sure why, but I have had that happen to a couple of folks I know lately. |
|
The emergency fund is not for sustaining you if you lose a job. It's to handle the expenses you really can't foresee - water heater dying, etc. Down the road, you can build 3-6 month savings in case you lose a job.
One thing I'm missing from the thread is a budget. Also, you haven't indicated whether or not you're still using CC for expenses. I'd recommend $1,000 for the emergency fund and the rest in the smallest balance. And set up a budget and live by it. |