We got about $6000 back with our tax return. We currently have about $30k in credit card/personal loan debt, balances ranging from $2000 to $9000 , with interest on the lower balances of 5%, 8% and 14%. The larger balances are currently covered under 0% promos but those expire this year and then will be considerably higher at 20% or so. Our dilemma is, we have a vehicle we owe 19k on. Payments are $340 with 5.5% interest rate. Should we take about 4K and pay down the car to where someone will buy it and free up $340 to throw at other debts, or, throw all of it towards the cards to reduced those balances?
Sun Feb 26, 2017 12:48 am
Cash: $ 4.20
Joined: 09 Jul 2011
Location: Anchorage AK
First you should fix your W-4 so you will have more money per paycheck, and a smaller refund.
Sun Feb 26, 2017 6:28 am
christcorp Preferred Member
Cash: $ 38.85
Joined: 05 Mar 2015
As mentioned, the first thing is to fix your w4. If you're getting a refund on your taxes, then that isn't good money management. If you think you like getting a refund, then no one here can help you until you change your way of thinking.
Next. You cut up all of your credit cards. Yes, cut them up. Obviously, you aren't able to use them as a convenience tool, but for loans. You need to 100% stop using them. If you can't agree to that, then again, no one can help you until you change your way of thinking.
Next, start with the lowest amount owed on the credit cards with interest, and pay it off. If you have more left over, pay off or towards the next one with a balance you can pay off.
Then, take the money you were paying on those with, and start paying off the next one. And put as much money as you can towards paying off all of the credit cards charging interest. And I mean every cent possible. If that means eating ramen noodles and cereal most days of the week for a year, then do it. You either loved beyond your means or didn't know how to structure unforeseen debt. It's time to be responsible and take care of it. Each time you pay something off, add all those payments to the next higher debt.
If you do this, and don't charge anything else new, and live below your means, you can eliminate your entire debt within a year. It's just a matter of if you want to or not. Other than a mortgage and possibly a car loan, if you have any recurring debt that you can't pay off in its entirety when the bill comes in, then you become a slave living beyond your means. There are some who say their car broke down, and the water heat went out, and they got medical bills, etc. These circumstances are rare. And even then, the answer isn't credit card bills. There's other ways to deal with these types of expenses.
Sun Feb 26, 2017 4:26 pm
yotux New Member
Cash: $ 1.20
Joined: 25 Feb 2017
I agree with christcorp.
The one thing that I did not see was make a budget and follow the plan.