Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
To anyone who disagrees with the debt snowball method (paying in order of balances and not interest rates), your main argument is that the math doesn't make sense since you will be paying more in interest. My response to you is this: if math was the only factor, then carrying debt wouldn't be an issue to begin with.
Instead, we are dealing with psychological issues here with people feeling defeated by the crushing weight of their debt. It's imperative to see progress by eliminating that extra bill. In most cases the amount of extra interest paid is very insignificant in the grand scheme of things. I can personally attest to the success of the debt snowball.
In 2012, I decided I want to pay off my student loans rapidly. At the start, if you had told me I would pay off $40k in one year, I would call you crazy. But here I am, $40k in student loans paid off in a year. I ended up paying 60% of my salary to student loans throughout that year. The debt snowball truly builds momentum, with borderline obsession to knock them out. Every bill knocked out supercharges you for the next one, and you try and find more ways to scrap money together to knock them out.
I have to be honest, I've tried the snowball method numerous times and it just doesn't work for me. I'd rather pay the minimums on the cards with lesser balances and really go after the one with a huge balance/high interest. What works for me doesnt always work for others.
In my opinion, you should do whichever one will keep you motivated and working on it. For some, that is the snowball method, smallest balance first. For others it means going for the highest interest rate first.
I personally went after my highest interest rate, which was a credit card (think it was around 12%), then a car loan at 8%, then student loans at 2-3%, and am still working on the house. The house was a higher rate than the student loans, but also will take years still to pay off, and it was nice not to have to write the checks anymore for the student loans. So I did a bit of both.
By the way, 27%!?!! My credit cards are at 9% and 11%. Is your credit so bad that that is the best you could do? If not, try to reconsolidate onto a lower rate card.
I think the best advice would be to pay the highest interest rate first. The disadvantage of credit is the COST of financing it-- interest. Taking care of the most "expensive" debts to carry will save you money in the long run.
Debt consolidation becomes tricky the worse your credit situation is. You may be relegated to higher interest rate loans, and less reputable lenders, if anyone is willing to extend further credit to you at all.
I can also appreciate the psychological factor of carrying debt, but I argue that you may want to keep the lower interest rate credit lines open.
Ouch OP. Overtime or second job. peanut butter and jelly, mac and cheese. cut those cards up. Snowball method works. Do something or you will never get out of debt.... you will be a slave to your debt. When you are done you'll feel richer. It's worth it.
I think the snowball method does work -- but sometimes I get the 0% transfers and of course then you have to pay those ones off before the high interest rate kicks in.
I still use credit cards - but less now. I end up "needing" them for family trips and Christmas but I set up automatic payments and pay at least the monthly amount every two weeks on each of them. That way no accidental late payments and they get paid off faster. Then sometimes I forget to check and the automatic payment kept paying one so it becomes like a debit card if I use it or they send me a check.
I think the snowball method does work -- but sometimes I get the 0% transfers and of course then you have to pay those ones off before the high interest rate kicks in.
I still use credit cards - but less now. I end up "needing" them for family trips and Christmas but I set up automatic payments and pay at least the monthly amount every two weeks on each of them. That way no accidental late payments and they get paid off faster. Then sometimes I forget to check and the automatic payment kept paying one so it becomes like a debit card if I use it or they send me a check.
Those 0% interest offers have a up front fee. I forget the exact percentage. It's like paying the interest up front. Since you know you will make family trips and Christmas comes every year could you start putting money away instead? I use credit cards but pay the balance in full every month. I use them for convenience and to earn air and hotel points.
Those 0% interest offers have a up front fee. I forget the exact percentage. It's like paying the interest up front. Since you know you will make family trips and Christmas comes every year could you start putting money away instead? I use credit cards but pay the balance in full every month. I use them for convenience and to earn air and hotel points.
Yes, I only take them when the rate to transfer is also low. I've got one of those offers now where it's 3% of the amount transferred and I only did that to get rid of higher interest cards. Then I closed them but keep the others. The real catch in the 0% monthly interest is that they tend to be higher interest when the time is up.
Yes, I'm heading in that direction but not there yet. I have all lower interest cards but I use them for different reasons -- a couple for gas, a couple if I travel but for the ones I use for gas and groceries, I have them on auto-pay so they sometimes have a positive balance, sometimes a negative balance. If I'm going to spend about $200 on gas and some extras a month, then I auto-pay $200.
It's too much hassle for me to pay an exact amount.
Yes, I only take them when the rate to transfer is also low. I've got one of those offers now where it's 3% of the amount transferred and I only did that to get rid of higher interest cards. Then I closed them but keep the others. The real catch in the 0% monthly interest is that they tend to be higher interest when the time is up.
Yes, I'm heading in that direction but not there yet. I have all lower interest cards but I use them for different reasons -- a couple for gas, a couple if I travel but for the ones I use for gas and groceries, I have them on auto-pay so they sometimes have a positive balance, sometimes a negative balance. If I'm going to spend about $200 on gas and some extras a month, then I auto-pay $200.
It's too much hassle for me to pay an exact amount.
I hope you make it because it seems you are caught in a trap even though it is not as bad as some but it's still a trap. Even though you keep your debt lower look at the interest. Imagine if you could put that in an account in your name instead. I feel like paying interest is like taking money and throwing it in the garbage can. How much do you have to work before taxes to earn that money?
Can you maybe make cheap meals to save there and put the savings aside, sell a few things on eBay, put in some overtime? Just brainstorming.
I hope you make it because it seems you are caught in a trap even though it is not as bad as some but it's still a trap. Even though you keep your debt lower look at the interest. Imagine if you could put that in an account in your name instead. I feel like paying interest is like taking money and throwing it in the garbage can. How much do you have to work before taxes to earn that money?
Can you maybe make cheap meals to save there and put the savings aside, sell a few things on eBay, put in some overtime? Just brainstorming.
I'm getting to a position where I'll have them paid off. Really only two have balances around $4000, the others are ones I use for convenience and I keep the balances low or even below 0. I'm salaried so no overtime, I could get a part time job but not sure I really want to do that for now. I'm expecting a pay raise and bonus in a couple months that should eliminate at least one higher debt.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Even though you keep your debt lower look at the interest. Imagine if you could put that in an account in your name instead. I feel like paying interest is like taking money and throwing it in the garbage can. How much do you have to work before taxes to earn that money?
