Author Topic: need help prioritizing debt repayment...  (Read 6518 times)

FuckRx

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need help prioritizing debt repayment...
« on: August 30, 2013, 03:20:15 PM »

I have the following loans to attack:

Student Loan:              $117,530 @ 2.9% fixed (minimum $350/mo)
BofA credit card:           $13,802 @ 0% (min. $149/mo)
Loan again 401k:         $12,568 @ 4.25% (automatic debit, can only pay back lump sum)
Chase credit card #1:  $4,284 @ 15.24% (min. $90/mo)
Chase credit card #2:  $1,188 @ 16.24% (min. $40/mo)
Citi credit card:             $2,773 @ 15% (min $43/mo)

I can probably pay at a rate of $2,000/mo


Frankies Girl

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Re: need help prioritizing debt repayment...
« Reply #1 on: August 30, 2013, 03:38:18 PM »
If it was me, I'd hit the highest interest ones first, so in this order:

Chase credit card #2:  $1,188 @ 16.24% (min. $40/mo)
Chase credit card #1:  $4,284 @ 15.24% (min. $90/mo)
Citi credit card:             $2,773 @ 15% (min $43/mo)


I don't know why you can't make payments to the 401K loan without it being a lump sum; from what I just went and read, it's automatically debited out of your paycheck, but I'd look into whether you can pay more into it to wipe it out after you've taken care of the other 3 higher interest debts.

As far as whether to pay off the school loan over the 0% BofA card... me personally, I'd be hitting that credit card first and then once all cards are paid off, I'd put the cards someplace safe and forget about them, but then I don't like credit card debt and having that many cards is a recipe for disaster in most cases. Not sure why you would need 4 credit cards? At the least, make one your standard card and forget about the other three and try to be super vigilant about never charging more than you can pay off each month. But logically if the BofA card isn't an introductory rate, then I'd hit the school loan hardest while making the minimum payment on the card.

You don't mention if you have an emergency fund. If you don't, I'd actually take a month or two to sock away at least a few thousand in a savings account (while still making your minimum payments on everything) and then take out the debts.

« Last Edit: August 30, 2013, 07:49:49 PM by Frankies Girl »

kh

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Re: need help prioritizing debt repayment...
« Reply #2 on: August 30, 2013, 03:48:28 PM »
Agree that you should order from highest to lowest interest.  Since the interest rate between the Citi and Chase #1 is nominal, I might pay the Citi first just to have the flexibility of not having that minimum payment anymore.

This plan will have Chase #2 knocked out this month, Citi gone in 3 months, Chase #1 gone in 6 (assuming you're just making the minimum payments on all the others).  However, if that 0% is going to blow up soon, that would definitely change the calculation.

Carrie

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Re: need help prioritizing debt repayment...
« Reply #3 on: August 30, 2013, 03:55:26 PM »
I would pay smallest balance to highest to get some quick wins, and it looks like that's pretty close to the order of interest rates.  Use the snowball effect and take all the minimums from the killed debt and pay on the next debt until they're all done.

FuckRx

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Re: need help prioritizing debt repayment...
« Reply #4 on: August 30, 2013, 03:58:07 PM »

thanks everyone for the input...

BofA is actually at 0% only thought 12/2014, so yes, more of an introductory offer.
I will start paying them down as instructed, makes sense and seems doable.

As for the 401k people, I called them 8 months ago, I asked if they could make much larger withdrawals from my paycheck and they said no, only way is to make one lump sum payment. And they wouldn't let me send money into them, I actually tried and they rejected the check.


FuckRx

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Re: need help prioritizing debt repayment...
« Reply #5 on: August 30, 2013, 04:53:22 PM »

I am in the process of saving emergency cash.
I am going to continue to fund my emergency stash as I pay off.

kh

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Re: need help prioritizing debt repayment...
« Reply #6 on: August 30, 2013, 05:03:00 PM »
Yep, that makes a difference.  The way I figure, throwing in some ballpark figures, you'll have about $12,900 left on the BofA in 6 months, with the three smaller credit cards paid off.  At this point, pay the minimum on the student loans and throw everything else at the BofA, which will pay it off in 8-9 months....which JUST makes it, assuming you stick to your goal of putting $2000 a month towards your debt.  Let the student and 401k loans ride until you get those big credit cards tucked away, the interest rates aren't terrible there.

This is assuming that the interest rate on that BofA card jacks way up, which is usually the case with cards with "introductory rates."  Make sure to read the fine print, too, sometimes they'll charge you the full amount of back interest if you're not paid up by the end of the 0% promotional period.  Not especially common, but worth checking.

sarahcooks

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Re: need help prioritizing debt repayment...
« Reply #7 on: August 30, 2013, 06:12:59 PM »
I would lower the priority on the 401k loan since you're paying the interest to yourself. 

Will

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Re: need help prioritizing debt repayment...
« Reply #8 on: August 30, 2013, 10:36:42 PM »
You can always plug these numbers into whatsthecost.com and go to the snowballing debt section to see how much the different scenarios cost you and when you'll be projected to be out of debt, etc.

CU Tiger

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Re: need help prioritizing debt repayment...
« Reply #9 on: August 30, 2013, 10:46:01 PM »

I have the following loans to attack:

Student Loan:              $117,530 @ 2.9% fixed (minimum $350/mo)
BofA credit card:           $13,802 @ 0% (min. $149/mo)
Loan again 401k:         $12,568 @ 4.25% (automatic debit, can only pay back lump sum)
Chase credit card #1:  $4,284 @ 15.24% (min. $90/mo)
Chase credit card #2:  $1,188 @ 16.24% (min. $40/mo)
Citi credit card:             $2,773 @ 15% (min $43/mo)

I can probably pay at a rate of $2,000/mo

So your minimums are $673?

Month one, pay minimums on these

Student Loan:              $117,530 @ 2.9% fixed (minimum $350/mo)
BofA credit card:           $13,802 @ 0% (min. $149/mo)
Loan again 401k:         $12,568 @ 4.25% (automatic debit, can only pay back lump sum)
Chase credit card #1:  $4,284 @ 15.24% (min. $90/mo)
Citi credit card:             $2,773 @ 15% (min $43/mo)

and pay all the rest on this one: Chase credit card #2:  $1,188 @ 16.24% (min. $40/mo) If you can really spend 2K a month on debt repayment, you'll knock it out in month 1.

Month 2, 3, 4

Pay minimums on these
Student Loan:              $117,530 @ 2.9% fixed (minimum $350/mo)
BofA credit card:           $13,802 @ 0% (min. $149/mo)
Loan again 401k:         $12,568 @ 4.25% (automatic debit, can only pay back lump sum)
Citi credit card:             $2,773 @ 15% (min $43/mo)

and pay the rest of your 2K on this one until it's paid off: Chase credit card #1:  $4,284 @ 15.24% (min. $90/mo)

From there on out I'd continue to pay them off in this order:

Citi credit card:             $2,773 @ 15% (min $43/mo)
BofA credit card:           $13,802 @ 0% (min. $149/mo)
Loan again 401k:         $12,568 @ 4.25% (automatic debit, can only pay back lump sum)
Student Loan:              $117,530 @ 2.9% fixed (minimum $350/mo)
« Last Edit: August 30, 2013, 10:48:22 PM by CU Tiger »

FuckRx

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Re: need help prioritizing debt repayment...
« Reply #10 on: September 07, 2013, 07:10:20 PM »

here is a piggyback question...
with my student loan at 2.9% should I be paying it off first or start putting money away?
my current savings is pretty much only 60k in 401k...
i have some emergency money too to take me through 3-5 months should i get laid off or something...