Hi everyone, I appreciate all the help I've gotten thus far on here and had another question I was hoping someone could answer for me. I have 3 credit cards and 1 line of credit I have been able to set myself up to pay off by the end of the year. This will leave me with only my car and house payments as far as any debt. I'm feeling good about getting these paid off and getting my wife and I moving towards our goals and better financial decisions, etc. In less than a month since I first found this site I have gone from feeling overwhelmed and not knowing how I'd get out of these debts to cutting our monthly expenses and focusing all extra cash on these debts and now being on track to have them paid off in full in just 6 months.
So here's my question...I can pay these off two different ways. First, I could continue making the normal payments I make each month on them (except the Visa, it will be paid off this weekend). This would be $100 Amex, $100 Best Buy, and $210 on the line of credit. Going this route I would have enough saved to pay off the Amex and Best Buy card by the end of August and the line of credit could be paid off in full by the end of December (from monthly savings and expected bonus).
The second option is to increase the amount I pay on each payment every month until they're paid off. This would pay them off in the same amount of time, but I would pay them off in payments rather than all at once. Is there any difference or is one way better than the other?? I may be over thinking this, just thought I'd make sure! Here's further info on the debts:
The three credit cards are:
1. Visa card - $6,500 balance with 18.99% interest (ran up from wedding and honeymoon 2 years ago)
- By the end of this week I'll have enough cash to pay this off in full.
2. American Express card - $1,100 balance with 16.99% interest (used for a hefty vet bill after our wedding when we were in a low spot with our savings)
- I can pay this off by end of August.
3. Best Buy card - $1,700 balance with 0% interest until August of 2015 (washer and dryer)
- I can pay this off by end of August
The line of credit has a balance of $7,600 with a 10.95% interest rate. As mentioned above I will have it paid off by the end of December.
Thanks in advance!
-Grant