|
|
| I desperately need your help...can anyone help me with a few questions?
I have 3 credit cards- - Balance $3200 @ 0% interested until March 2015. Minimum payment of $32
- Balance $ 4200 @ 0% interest until March 2015. Minimum payment of $42
- Balance of $7900 broken down- $3200 promotional 0% ends 1/27/14 then goes to 14.99%; $3500 promotional 0% interest ends 5/25/2014 then goes to 14.99% and the remain $1200 is at 0% interest until 3/2015.
I know Dave Ramsey says to snowball with the smallest balance first, but since all of these are basically at 0% interest-would I be better off paying the credit cards down from the soonest to expire on the promotional APR to avoid paying the interest charges? I am hoping to have these all paid off by mid-summer if that makes any difference.
We have 2 checking accounts- one for all the bills and one for general spending/snowball. I know Dave Ramsey advises to account for every penny when doing the budget...I’m a chicken and have a really hard time doing this. I feel this need to leave excess money in our account for a “just in case” situation even though we have the savings account set up. I have our budget pretty well worked out but for some reason I almost get panicky if there’s less than $500 extra money in each checking account. Any advice on how to break me of doing this or is it ok to budget this way? Thank you for any input. |
|
| |
|
  Warmblood with Wings
Posts: 27846
   
Location: Florida.. | tear up the credit cards for starters..
a bump for you.. |
|
| |
|
 Elite Veteran
Posts: 1035
Location: TN | If I was you I would work really diligently to pay off the credit card balances that will soon start charging interest. Then start paying off the others starting with the smallest. I agree with the previous poster and Dave Ramsey - cut up the credit cards. If you can't pay your credit card bill off every month, then you don't need it. They are a quick way to get into major debt. I know what you mean about not wanting to account for every cent in budgeting. I have the same problem, but it has helped me to have a "Blow Money" category to put $20-40 in each month as my just in case money. Good luck! |
|
| |
|
| Lol yes!! We had a big project we were working on and needed the money up front. Worked out good with the 0% to get it done but now it's time to get stuff paid off. Just nt sure whats better because mathematically its smarter to pay off the interest balance first but Ramsey plan is lowest balance. |
|
| |
|
 Uh....never mind
Posts: 2696
Location: Midwest Farmer's Daughter: Central Illinois | I am down to one CC balance of ~$1900 & that is from two balances of ~$10000 just earlier this year, so it can be done! Good for you for the plan!
I was told by my CC company that any $ over the minimum payment is applied to the balance with the higher interest rate, so in my opinion, I would throw everything over your miminums at the one whose rate expires first.
Good luck! I have a little more time & I will be completely debt-free...& then I have the overwhelming urge to buy a trailer. Facepalm.
ETA: You can ALWAYS transfer the balances to another card immediately when the account begins to accrue interest.
Edited by RLB 2013-12-31 10:41 AM
|
|
| |
|
Extreme Veteran
Posts: 550
| Dave Ramsey says pay the smallest first, but to me if the smallest is at 0%, and another is higher, it only makes sense to pay off the one with the higher interest rate.
He says getting the smallest one paid off gives a feeling of accomplishment, saving the extra interest would feel better to me. |
|
| |
|
| If you have the cash pay off the $3200 part of the $7900 balance first. That interest is going to eat your lunch. Once you are done with that pay off the $3500 part of the $7900 balance before that promotion ends. Once you have completed paying that portion off start the snowball that Dave suggests.
Don't worry about the $500 you feel you need in the account. You are just using that as part of your emergency fund. Doesn't matter where you keep it as long as you have it. |
|
| |
|
 The Original Cyber Bartender
Location: Washington | No brainer to me is to pay off the one that is going to kick in on the interest first. Hopefully you will have the second half of that payment in 5/14.
This whole deal stinks, you need to start amping up those other minimum payments. Paying those minimum payments will only have you paying them in the 300 and 400 dollar rang by years end, then the interest will kick in on the remaining balance of 2,900. and 3,900 (rough numbers). I would forget having that 500. dollar buffer for awhile. You need to pay off 15,000. dollars period.
And like everyone else has said tear up those credit cards.
|
|
| |
|
 That's White "Man" to You
Posts: 5515
| How much per month can you afford(are willing) to put toward payments on the total debt? |
|
| |
|
 MEOW!
Posts: 4477
Location: High heels in the air... | Pay off the one that is coming due...then concentrate on the debt snowball...get a plastic container out of the cabinent and freeze those cards...throw away all credit card offers no matter how good they look...do your budget...it's tough...mine is on an irregular income but somehow I make it...you can do it!!! |
|
| |
|
| Thanks! That was basically my same thoughts as far as paying off the last credit card first. I will have enough to have it completely paid off by the end of March so I shouldn’t have any interest charges going this route.
I guess I should have included in the original post that the reason we have so much on credit cards is because I purchased 5 years of service credit at work so I can retire early someday -unfortunately it wasn’t a mad shopping spree. It made better sense financially to purchase the lump sum at 0% interest then to take a State loan at 8% interest or roll the money out of my deferred compensation. I needed to purchase the service credit when I did because the rate increases substantially every year with age and increased income- I would be paying approximately 1.5-2% more every year that I waited to purchase As far as payments, we will have $2500 extra each month to make the payment to pay this off so all the cards should be paid off by June.
Ok, next question...paying off the house. I have read several different view on whether or not to pay off the house. Ramsey says after your contributing nicely to a IRA and kids college fund then it's ok to pay off the house; other investors say not to pay off the house but rather invest all of it in a higher interest bearing account-IRA, ROTH etc... What’s your opinion? I would like to be debt free but can see the argument of losing a large amount of potential money because I paid off a house at 3% interest instead of investing it in a higher interest bearing account.
|
|
| |
|
 Dog Resuce Agent
Posts: 3459
Location: southeast Texas | Having your home paid off is a HUGE emotional plus. Lets say the worst happens, you get hurt. Cant work. Home is paid off. No worry about makeing payments. (and yes, especially with horses, sh*t happens)
After home is paid off, use that money and pile it up in your higher intrest investments. |
|
| |
|
That's White "Man" to You
Posts: 5515
| Right now there are virtually no savings or investments that pay more than 1%. In the future that will change. If I were you I would be putting that extra money on the house until savings rates surpass your home loan rate.
Edited by Whiteboy 2013-12-31 12:19 PM
|
|
| |
Dave Ramsey Gurus come hither...