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What to pay off first??

Im a newb here so let me first post my debt info:

I have 5 main credit cards that I want to get paid off.

  1. $290 ($900 limit) 0% apr til January $10 payment per month
  2. $1810 ($2000 limit) 22.5 apr $47 payment per month
  3. $5645 ($6000 limit) 22.5 apr $146 payment per month
  4. $6082 ($8400 limit) 6.99 apr $94 payment per month
  5. $4844 ($5500 limit) 0% apr til August $72 payment per month

I’ve also got about $300 a month worth of student loans, but I’m not worried about those right now.

I’ve already heard about the idea of paying off the smallest first to the biggest, but what makes the most sense financially. I get a bonus next week that will be about $1500, where should I put it? I can afford about $300 a month extra to go towards payments, which one should it go to?

Thanks for taking the time to help!

I would still start knocking them out in order, smallest balance to largest. If you have $300 extra to go towards the debts anyway, #1 is going to be gone in a month any way you look at it. Get that paid off and have one less card on your list. Paying the other $1200 of the bonus and $300 extra is going to knock out #2 within a couple months and then you have only 3 cards and $357 MORE to go on card #5, you next smallest.

I envy you. Your snowball is rolling pretty quickly. I have three cards…and my lowest balance is still about $9900.00. Its going to be a long while before my snowball rolls. I just have to remind myself that each month I am getting myself in a BETTER situation, it isn’t getting worse, so even though I can’t yet pay one off, I am improving my situation. That has to be enough for me.

In case you decide to get some quick cash for your emergency expenses – there is a great company named ElcLoans – they offer payday loans online without credit checks. Therefore you can use their services to get some cash and do not worry about your credit score at all.

Apply your entire bonus to debt #2, in Jan. balance transfer debt #1 to Debt #5. Apply extra monthly payment to debt #2 until paid off. Once paid off add the monthly payment to your extra monthly payment and apply to Debt #3. Then once it is paid off, apply all extra monies toward either debt #4 or 5 which ever has the highest interest at that point. The name of the game is to minimize the interest paid out. Do not close any cards once paid off, just leave dormant. Consider appying for other 0% interest cards and balance transfer highest rate balances while paying off debt.

Now is the time to eliminate debt! Do not look at what makes sense ‘financially’, look at what will get you going and keep you going. That is why Dave Ramsey suggests the snow ball method.

Pay off #1 now. Put the 1500 towards #2 plus the extra $300 and you have 2 CCs gone in 2 months.

Take extra $57 you no longer pay towards them, along with the extra $300 and put it towards #5. Even though it is zero interest, get it behind you where the CC cannot change their mind on the zero interest. In less than a year, # 5 is gone.

Take the $329 and go after #3, and then #4. Any more bonuses or extra cash go towards the lowest.

This method gives positive incentives quickly and helps keep you going and not quit. Taking on the biggest mountain first tends to get discouraging.

Debt Management vs Debt Settlement

When working full time, I was able to reduce my credit debt from 16,000 to 13,000 paying $395.00 a month (using a debt management program). My job ended and I have not been able to get full time employment only contractual opportunities. Two of my three cards are 60-90 days late. As I work on regaining financial footing, I’ve am trying to decide between rejoining debt management or doing debt settlement. I know if I do debt management – paying $395 a month-it will take me 4 years to pay it off. If I do debt settlement, I will pay $307 (including fee) for 23 months. What is the better choice? Thanks.

I imagine that both will make for NEGATIVE information being reported to your credit reports, which will cause future derogatory actions (higher interest rates, more fees, etc.), plus the late payments, which creditors will definitely not look at kindly.

If you settle, get the amounts in writing FIRST, well before making a payment. Keep copies of everything. Mail the bank checks and a copy of the letters to the creditors, and make them SIGN for the receipt of the payments. Document, document, document.

Then, send copies of the checks and the letters from the creditors clearly showing the amounts to the Big 3 credit bureaus so your paperwork is updated promptly.

Take care & good luck!

I am in almost the exact same situation. I’ve been on a Debt Management Plan for 1 year. I lost my job because the business just closed and have missed two payments on most of my cards.

I just got hired for another job but haven’t started training yet. I know that if I had a month I can get back on track once I start getting paid again. But I’m not sure if they’ll even let me back into a DMP. I owe about $8,000 total so I don’t want to file bankruptcy for something so small. I am thinking of calling them individually and trying to settle. If they don’t agree, I will tell them that I am contemplating bankruptcy. its better for them to accept some rather than nothing at all. I definitely won’t go with a Debt Settlement Company because I don’t trust them.

What I’ve learned (tracking strategies too)

Okay, so I thought I posted this here, but it was another group I’m in. Apologize off the bat for the length, but I got carried away with responses (that actually may be relevant to some of us) and some tips based on a year of making plenty of mistakes and finally figuring out what works…….

Also, can’t post my Excel spending tracking chart, but there’s a good descrip of it below:

First, on cards. I didn’t close my unpaid-off cards because I don’t want my credit score to drop (to save on my insurance premiums, etc). However, I don’t carry them. If you carry them, or even keep them, you always have a need to use them.

It’s scary to get rid of them when they’ve been a crutch for so long. But if you are truly serious about making a change in your life, you need to actually make the change. I was on the fence for a while – wanting to make a change and stop debting, but never doing it. I started telling people, “I can’t afford to [go to lunch, etc] this week. Can we go next week?” Or, in some cases, I flat out said that I didn’t have the money to do some expensive activity a friend proposed. And when I started dating my boyfriend, I told him about my situation.

As soon as I started admitting to others that I had a problem, I felt like I’d been freed from this horrible, dirty secret.

I also started watching Suze Orman every Saturday (well, recording it, and watching it later). I started watching Dave Ramsey every day. I started reading as many books as the library had to offer in the world of personal finance. Some were great. Some were eh. Some were a complete waste. But I started learning. And making changes.

Oh, and probably the most effective thing I did was to create an Excel sheet with a few columns (month, date, $ spent, overall category, smaller purpose, location, and deductible y/n). I wrote down EVERY single penny I spent in this Excel chart – from $57 at dinner to $.60 library fine. Wow. I started spending less. And I really knew what happened to my money and where my budget categories weren’t realistic (for example, my $20/mo for pets was actually $25 in real spending). I was also ashamed for the first two months at how much money I wasted. Money I didn’t have.

I also created a “debt watcher” chart. Made columns with the name of each debt and below that, the amount I started with. I listed out each pay date, and each pay date (I pay everything twice a month to reduce the avg daily balance), I write down the new debt amount. The farthest right column is a debt total. I can watch my total debt (which is a bit overwhelming) go down every time I make payments. I feel like a success because of this.

Despite a fency year, I paid off $4K. This next year, I plan to pay off $15K. That will still leave me with about $36K in a loan and a CC. It was much faster to get into this mess than to extricate myself from it. But I’m sick of it. I’m finally sick of it.

What will make you sick of it?

A couple good resources:

  • Suze Orman – anything but esp “9 Steps to Financial Freedom” and “Women and Money”
  • Mary Hunt – anything. Plus, she has a free daily e-newsletter and a (CHEAP – maybe $26/year?) subscription web site with great tools, including a debt repayment calculator that tracks your repayment plan and is the best one I’ve seen by far.
  • Dave Ramsey – Total Money Makeover

If you have weight problems too, it’s not surprising. You’re filling a void with money and food. Trust me. I am a Weight Watchers lifetime member – 3 years at goal and counting. Tracking what you eat AND what you spend every day is really successful.

People who get out of debt aren’t any smarter or more capable than the rest of us. They just mean it. Every day, they wake up with the intention to follow through.

I am new here

Hi everybody! I am new here, I am new even in what “New Year’s Resolutions” are concerned (I always avoided them because I always thought that they won’t last), but now I am very motivated and one of my New Year’s resolutions is to be free of debt as soon as possible, in order to be able to go on with my life. I never planned my finances, never tracked (well, not seriously) my expenses, but it really is the time for me to start doing those things. I hope I won’t get onto anyones’ nerves with my questions, which could sound stupid for someone which is financially wise, but I am also new to the financial system here and I don’t really understand a lot of stuff. So please bear with me! :)

Thank you all and have a great & debt free year!

welcome I too am new and suggest that we track the money in and out within daily spending…..that is a starting point….vagueness prevails many of us….hopefully you will stick around all year. hugs bill

I am sure I speak for all (although not really qualified to do so, LOL) when
I say, “Bring on the questions!” I am sure there are people here who can
relate to every situation. You are no nuisance.

I am Melissa, on babystep 2…which means I have funded my $1000 emergency fund (BS1) and I am paying off my debt by using a debt snowball plan. I have a ways to go, I still owe about $39,000 in cc/medical debt (bad divorce, period of unemployment using a cc to pay everything else, too many times of trying to help my friends, etc…) . I followed Dave Ramsey’s plan a number of years ago and got it all down, but then life got in the way and I got in worse debt. I started back in September, and although it is slow going so far, I have paid off my smallest medical debt and and working my way though it. I just keep reminding myself, my situation is getting better each month I go by without racking up any more debt and am paying on it all.

Thats me. I am also a single working mom to three boys, with a great boyfriend. I think of all the things I could do if I weren’t paying $1200/month on debt…LOL…its motivating!!

Re: urgent help needed for a GA foreclosure issue

I work for a mtg company so I will try to explain some things. If you were not originally escrowed for tax and/or ins, your pymts would have just been P&I. If you had no Insurance or proof that you paid your Ins, you could be Lender Placed for the Ins. LP’ed Ins is very expensive. If it was tax that was due, the Mtg. Co. would pay that rather than letting it be delinquent and possibly have the home sold at a Tax Sale. If you could not pay those and requested the Mtg Co to pay that, then an escrow acct. would have been set up and then you would owe both P& I and T&I (escrow).

There are steps that should have been done by the Mtg Co before it got to this place. You should have been notified by mail that you needed to provide proof that you had Ins and that it had been paid or you should have gotten notices from your Tax office saying that the taxes were delinquent. You did not specify whether it was tax and/or ins that you were escrowed for so I am giving both scenarios.

You should have gotten an Escrow Analysis after they added T&I showing a bunch of figures and the new pymt amount with the T&I. Honestly, I am very surprised that they continued to take just the P&I part of the pymt. The Co. that I work for, would have mailed your cks back as short pymts with a letter explaining that. Did they ever send you any correspondence about the pymts that what you were sending being less than what was owed?

I assume that you have spoken with Default Mgt or Loss Mitigation about the Foreclosure. It seems very odd that they cannot work something out to get the escrow funds they paid out for you. Since your escrow acct has a deficiency and shortage, maybe they could spread that over 24-36 months. If the Mtg Co did not send you correspondence about your pymts being short along with asking for the whole pymts, then they were negligent, IMHO.

If you received correspondence and just kept paying the P&I only, then you need to get them the money that the Mtg Co paid out for your T&I. From the Mtg Co perspective, it was their money that was paid out for T&I and they do need to get paid back for that. I have not heard of Foreclosing over T&I and I would question that just because they did continue taking just the P&I pymts. Of course, I do not know all the details so I can only speculate on what you may or may not have gotten in correspondence, etc.

Your offer of $4000.00 right now sounds very reasonable. They should be willing to take that now and then spread the rest over 12 months. In the current housing market, it seems like they would much rather do that than a foreclosure. Foreclosures are very expensive for Mtg Companies to do.If this is set for a Foreclosure sale the second week of Feb, you should have been getting many letters during that time requesting money.

The only thing that I can suggest it that you keep calling them. Call your current Company Monday but at this point, they will probably not be able to do anything. I don’t know what the Foreclosure laws are in GA so you would have to speak to a Real Estate Atty for that. I wish you the best.

Urgent help needed for a GA foreclosure issue

Here is the gist of things.

P&I of mtg. payment has NEVER been late. Mtg. company paid our taxes in 2012….they never added to our payment for that and I guess I just played dumb and assumed they’d add it in our payoff someday. So Feb. 2013 they added an escrow acct. to our payment which increased our pmt by 298.00 a month. I didn’t know this cause I kept sending in the normal P&I every month and they kept taking it. In July/Aug. of 2013 I get a letter that we are behind… I quickly hunt up all my cancelled checks and fax them over… didn’t hear any more about it. Dec. 18th my DH opens a letter from an atty that we are being foreclosed on.


I’ve been on the phone with the atty and the lender every day since that day. Going over the situaion, going over our previous PERFECT mtg. history… yada yada…. Ok, final question, how do I clear this up…….. answer……. send them certified funds for 5865.00 (includes 1300.00 worth of atty’s fees). I explain, I don’t have that much, but I can send you 4000.00 today… that would EASILY bring it to a non foreclosure status and then we’ll get on track with the payments again and work with your repayment specialist.

NO NO NO NO NO NO… I’ve been told no by everyone exect the cleaning lady. It’s all or nothing. They have sold our loan to another company and they want the loan totally current including atty costs or they want it in foreclosure (that makes NO FLIPPIN SENSE TO ME).

I call the new company that takes our loan over this coming tuesday to see if I can talk common sense with them. Having a loan on your books that is 30 or 60 days late is much better than a foreclosure. Especially with the market… our house would sell for MAYBE 90k currently and it was 160 just 18 mos. ago when I had it appraised. The new company has no interest in allowing us to reinstate the loan…. however, they’d like to just foreclose on it and then sell it back to us at the current market value of 90k (we currently owe about 125 so they are tring to tell me it would be like making/saving 35k)……… HUH? What lender in their right mind would finance us at this point with you people showing us in foreclosure?

I’m calling my original lender in the morning to see if I can get to someone that took some common sense meds before coming to work. Then my next call is going to be to a few attorneys to get an idea of where I stand. The foreclosure sale date is set for the 2nd. tues. in Feb.

If anyone has knowledge of GA foreclosure laws, QUALITY attorneys in metro Atlanta or any other solid advice I surely would appreciate it. I am just baffled that in an economy of massive foreclosures from peolple that absolutley can’t pay for the house that I can’t get someone to work with me over a screw up.

Thanks in advance for any and all ideas, helps and prayers!

CapitalOne After Me – Now What?

About me:

Lost job a year ago. Got a new one, but it is taking time to build up my income to the point that it used to be. Had to go delinquent on credit card payments. Now, CapitalOne has served me a summons. Of course, they want the entire 13K I owe them. This is impossible as I am JUST paying my bills. I’m stuck in a house that’s way too expensive for me, but with the market-selling is not an option. In one year, my credit score has gone from perfect…to pathetic. I have struggled just to keep the mortgage paid.

Enough of my sob story. Here’s the question:

What advise do you have on next steps? I know if I contact a “debt reduction” service, they are just going to put off the credit card company further and make a margin for their services. I’ve received letters from lawyers wanting to discuss bankruptcy. I wonder if my best first step would be to call the credit card company and work out some payment plan…although I fear the monthly amount I could pay would not inspire them. Is there any such thing as a debt reduction loan? I make good money…just not enough to pay this debt off and still survive.

Any advice would be helpful. Thank you.

If you contact the Capital One Lawyer listed on the summons, hopefully you will be talking to someone with a brain, unlike the collectors. You might be able to work out a payment plan with the lawyer, have all your finances (income, bills) handy and be totally honest.

If that fails to bring about a reasonable agreement, answer the summons and meet them in court. Again, take all of your finances and lay it before the Judge. The court will order a payment plan and do so more from your advantage and not theirs. Failure to appear, you lose by default and the court will order garnishments which you cannot afford.

This is my question as well. I think I am at a point where I can make small payments to three credit card companies that are currently in collection. If they would reduce the amount I owe, and stop accruing interest, so that it’s like a “settlement”, but something I can make payments on, I would like to do this. Is this even likely? I met with a bankruptcy attorney last week, and quality for chapter 13, making payments over 5 years, but want to avoid this. The stress of the situation is making me sick, though, I need to either make a reasonable payment plan with the credit card companies, or seriously consider the chapter 13 option. Has anyone been able to get this type of payment plan or settlement? Thank you.

You said they served you a “summons.” Does that mean you’ve been sued and will be going to court? If so, go to court and tell them exactly what you ve told us. If you don’t show up, CapitalOne will automatically win and they will most likely start garnishing your wages. If you do go, explain the situation and tell them when you can pay, the judge will probably work with you. I’ve contacted AR Trust Services. They renegotiate unsecured credit cards. So far, they’ve been collecting money, and telling me that they’re negotiating with them. I do have an attachment to my phone that I love. I pass a collector to a recording that says they need to stop calling, the customer has contacted a legal help and they need to not call me, but them and they give a phone number.

I haven’t found anything bad online about them, but the calls have stopped and they don’t just stop on their own.