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fireproof posted 2/9/2014 19:06 PM

I am attempting to pay off some debt. If you have two cards with a 10% rate and they give you a chart to show you how much to pay to be at zero in 3 years do you pay that amount on both cards or do you pay all the extra on one card?

In theory I would live to pay both but can't. Which one is better?

Williesmom posted 2/9/2014 19:11 PM

I would pay off one, and then work to pay off the other as I get the money. It would just give me a better feeling to know that I was rid of one.

persevere posted 2/9/2014 19:20 PM

I agree with WM - that's pretty much Dave Ramsey's snowball technique - you pay the minimum for all of your debt except the largest (excluding mortgage) and you snowball everything you can monthly into that larger debt to get it paid off. Then you apply that amount to the next largest until it's paid off and continue the cycle. It works pretty well and you feel so good as you progress.

I need to get that started again for me.

simplydevastated posted 2/9/2014 19:25 PM

Quicken used to have a debt reduction plan. You just plug in all your card information and your payment amounts and it would calculate how much to pay on which cards to be debt free in a certain amount of time. Might be something to look into.

I used to use Quicken a lot to keep track of my accounts.

TrustedHer posted 2/9/2014 20:09 PM

persevere, I think Dave Ramsey wants you to pay the smallest first. It means you get to see your progress faster.

Otherwise, I agree. Pick one and pay it off first, then you have one less monthly bill, and you can focus on the other(s).

StillLivin posted 2/9/2014 20:28 PM

How much do you have to put towards the credit cards.
A good example.
Say you have two credit cards. One has $1000, and the other has $350. Since both have the same APR that won't factor in.
Pay a little more than the minimum on the $1000, but put as much as you can to pay the $350.
Say $70 for the $1000, but you have $120 to go towards the $350. When you have the $350 paid off, you would then apply the $70 AND the $120 ($190) towards the $1000 bill until it was paid off.
All hypothetical though!

Dreamboat posted 2/9/2014 20:56 PM

Any chance you can transfer one or at least part of a balance to a lower interest card?

If not and they do have the exact same interest rate, then pay the min on the higher balance card and pay as much as you can on the lower card. Then once you get the lower card paid off, pay as much as you can on the other card. However if they are a different interest rate, even by a small percentage, then pay as much as you can the one with the higher interest rate first. And live as frugally as you can while you pay them off. It is such a great feeling to send that last and final payment to a credit card company!

fireproof posted 2/9/2014 22:05 PM

Thank you for all the great advice!

Hopefully I will make a dent in my debt!

fireproof posted 2/10/2014 06:45 AM

Overall is 10% a good interest rate? If I can consolidate debt should I and is that a negative on your credit?

Undefinabl3 posted 2/10/2014 07:14 AM

Overall is 10% a good interest rate? If I can consolidate debt should I and is that a negative on your credit?

Overall yes it is.

No, if you consolidate you will be fine, just do not close the cards off altogether, that will hurt you. Then, when the card is paid off, you will need to use it a few times a year to keep up the good credit...so like use it for gas a few times, then pay it off as soon as it shows on the online statment so that you can pay it off before having to pay intrest on it.

Also, I think the reason why people say to pay off the largest one first is because you will end up paying more in intreste while paying off the little one, while still only paying the min, payment on the larger amount. If you pay off the larger one first, you will pay less overall intrest.

If you get any money back from taxes, you need to use that to pay off debt, unless you have like major car repairs, ect.

In my house, until there is no debt, the Tax check does not go to 'fun things' - just the way it is.

Everyone though is missing the key piece in the Dave Ramsey guide. Before anything starts to get paid off, he states that you need to save back $1000.00 as a emergency back up. This way, if anything DOES come up, you do not have to use your credit to fix it.

So, Save the $1000.00 first. A good way to do this is that every single time you go to spend money on something you don't need....take that cash and put it into the savings account. So, that $5.00 McD breakfast, move the money over. That $3 coffee, move the money over.

Its not forever, you can sacrifice for a few months until you get it built up.

Amazonia posted 2/10/2014 07:36 AM

No advice to add, just wanted to say good job for paying down your debt (especially pesky CCs!).

fireproof posted 2/10/2014 17:51 PM

Thank you so much for the encouragement!

I will use all your advice and pay down that debt!

Crescita posted 2/10/2014 21:10 PM

I don't know if this is an option still with the economy the way it is, but I used to call my bank and negotiate the interest down. They usually had a promo they could apply for 1 year. You might be able to get a lower rate without transfer fees that way. If you've been a loyal customer, aren't late and get credit offers you should have good leverage.