Need financial debt advice(paying off)

[kball]

Here is my situation. I have the following debts, and really want to know the best(quickest) way to get them paid off. Mainly which order is best.

Credit Card #1 $9,000 balance at 6.0%
Credit Card # 2 $5,000 balance at 6.0%
Car #1 $26,000 balance at 5.89% with 44 months left at $660 per month
Car #2 $17,500 balance at 3.9% with 30 months left at $610 per month

I figure it would be best to concentrate on one, and when that is done with, whatever money that was being spent on that one, roll it in to the next one and continue on. I figure start on Car #2 since it could be payed off the soonest and the $610 extra a month would help tremendously on the next one, Mainly, both car payments being freed up to pay the credit cards off. I am no expert(obviously), but open to more knowledgeable suggestions/advice. Thanks in advance.

 

[s_x_i]

Sell cars, buy beaters - suck it up. Your car payments are instantly available to pay off your cc's :idea:

Pay off card one
roll payment into card two

Save up, buy better cars with cash.

:beer:

 

[kball]

Thanks for the quick reply. As far as selling the cars, I would love too, BUT, we have negative equity in both. So, I think we have to keep them. Plus, only having 2 1/2 years left on car #2, it seems dumb to sell that one especially. I mean no with more of the payment going towards to the balance instead of interest anyway.

 

[SonicDTR]

Card #2
Card #1
Car #2
Car #1

I figure paying off the lowest ones the quickest will enable you to roll that money towards the bigger debts, not sure if its the smartest move, but the approach I would take at it.

 

[RCRAMIE]

Card #2
Card #1
Car #2
Car #1

I figure paying off the lowest ones the quickest will enable you to roll that money towards the bigger debts, not sure if its the smartest move, but the approach I would take at it.

+1 Would allow you to hit a goal faster to also the rates on the cards a higher than the car get theme paid off.

 

[Common]

Trying to sell those cars, even if you had to chip in some would be the ideal solution. What kind of cars are they and if do you believe you could offer to sell to someone with a cash incentive plus them taking the cars off your hands?....more complex than you would like but actually the quickest fix.

 

[03cobrah]

Here is my situation. I have the following debts, and really want to know the best(quickest) way to get them paid off. Mainly which order is best.

Credit Card #1 $9,000 balance at 6.0%
Credit Card # 2 $5,000 balance at 6.0%
Car #1 $26,000 balance at 5.89% with 44 months left at $660 per month
Car #2 $17,500 balance at 3.9% with 30 months left at $610 per month

I figure it would be best to concentrate on one, and when that is done with, whatever money that was being spent on that one, roll it in to the next one and continue on. I figure start on Car #2 since it could be payed off the soonest and the $610 extra a month would help tremendously on the next one, Mainly, both car payments being freed up to pay the credit cards off. I am no expert(obviously), but open to more knowledgeable suggestions/advice. Thanks in advance.

well i've been reading dave ramseys book for a while and he recommends paying off the smallest debt first.

here's why:
Getting out of debt is like losing weight. It is an emotional decision. You get out of debt when you get mad and passionate! If it takes six months to lose a pound, will you stick to that diet? No way. Paying off the smallest debt first allows you to get some immediate, positive feedback—and encourages you to keep going. Once the debts start getting paid off, you’ll become addicted and stick with the program.

if your serious about getting out of debt i suggest you look into his stuff

 

[wrksnfx]

Card #2
Card #1
Car #2
Car #1

I figure paying off the lowest ones the quickest will enable you to roll that money towards the bigger debts, not sure if its the smartest move, but the approach I would take at it.

YOUR BEST BET IS TO PAY OFF #2 CREDIT CARD DOWN FIRST USING DOUBLE PAYMENT IF YOU CAN AND MINIMUM PAYMENTS ON THE OTHERS & AND FOLLOWING WHAT Rubenk SAID IT WILL GET ALL YOUR BILLS PAID OFF FASTER AND SAVE YOU A BOAT LOAD ON INTEREST.

 

[s_x_i]

ahh shit, I hate to do it - especially because I'm not getting commission

you need to read this book:

The Richest Man in Babylon - by George S. Classon.

When you've read it (and only when you've read it!) go to:

Dave Ramsey Homepage - daveramsey.com

I don't agree with all of Dave Ramsey's principals, he's a little too extreme for my tastes, but there's a ton of great information on there.

Good Luck!

 

[kball]

Trying to sell those cars, even if you had to chip in some would be the ideal solution. What kind of cars are they and if do you believe you could offer to sell to someone with a cash incentive plus them taking the cars off your hands?....more complex than you would like but actually the quickest fix.

The cars we(wife and I) have are a 2005 BMW 330xi and 2008 BMW 135i. You may be wondering well no wonder you're in debt, but when we got them 2-3 years ago, my wife had a much better paying job. Lesson learned in that department and just trying to move on from those two mistakes.

 

[thomas91169]

Id pay off card #2 first. Then use that available monthly income to pay down one of the vehicles to the point to where you owe what its worth, sell it and alleviate that payment, which can go towards killing card #1. Once thats abolished, work on paying down the other car and sell it off as well (or keep it, it is nice to have a newer car thats under warranty).

 

[SM0KE]

well i've been reading dave ramseys book for a while and he recommends paying off the smallest debt first.

here's why:
Getting out of debt is like losing weight. It is an emotional decision. You get out of debt when you get mad and passionate! If it takes six months to lose a pound, will you stick to that diet? No way. Paying off the smallest debt first allows you to get some immediate, positive feedback—and encourages you to keep going. Once the debts start getting paid off, you’ll become addicted and stick with the program.

if your serious about getting out of debt i suggest you look into his stuff

Exactly.

Regardless of negative equity, sell both cars and pay cash for beaters to drive around for a while. This is going to require you to get a personal loan from your local bank in the amount you're upside down (assuming you don't have the difference in cash laying around somewhere). Using the extra $1,200+ coming in every month, within a matter of months you should be able to knock out that credit card debt, and the loan you take out for the difference on the cars.

And yes, pay off the smallest credit card balance first (making minimum payments on the other debts), then apply that amount to the next debt along w/ the extra $1200, from getting rid of the cars.

Good luck, man! I know it's probably not the most popular way of doing it, but using this plan you'll be out of debt in no time!

 

[carnut101]

So you want him to throw away possibly thousands of dollars selling both cars and take out an unsecured loan at most likely a higher interest rate to cover the difference? Then, since he doesn't have a large chunk of cash, he'd need to take out more loans to pay for the replacement cars. That makes no sense. Yes, the cars aren't helping the situation, but he shouldn't panic and dump the cars. All of his interest rates are reasonable, but his credit score is most likely worse off now than it was at the time he got the cars, so that's another reason for higher rates. I'd be surprised if a bank even gave him a personal loan. Also, if memory serves correctly, auto loans have a significantly smaller impact on credit scores than credit card debt.

Here's what I would do: Make your normal payments on both cars while concentrating on the credit cards. Though the rates are identical, you're paying a larger dollar amount of interest every month on the higher balance, so figure out an amount you can pay monthly that will bring down card #1's balance quickly while not ignoring card #2. Once the balances of the 2 cards match, pay for them equally until they are payed off. Then shift your attention to the cars. Car #1 is a higher balance, higher interest rate, and newer loan, so you're paying way more interest on car #1 than car #2. Take the money you were spending on your credit cards and consider this the amount that you can pay on top of your regular scheduled payments for your cars. Pay off car #1, then pay off #2.

It would help if we knew how much money you have to work with monthly to pay for these 4 things.

 

[Planter]

find a sucker to buy both cars for the payoff, get a beater, then use that $1200 a month you're not paying on car payments to work down that credit card debt.

 

[SM0KE]

So you want him to throw away possibly thousands of dollars selling both cars and take out an unsecured loan at most likely a higher interest rate to cover the difference? Then, since he doesn't have a large chunk of cash, he'd need to take out more loans to pay for the replacement cars. That makes no sense. Yes, the cars aren't helping the situation, but he shouldn't panic and dump the cars. All of his interest rates are reasonable, but his credit score is most likely worse off now than it was at the time he got the cars, so that's another reason for higher rates. I'd be surprised if a bank even gave him a personal loan. Also, if memory serves correctly, auto loans have a significantly smaller impact on credit scores than credit card debt.

Here's what I would do: Make your normal payments on both cars while concentrating on the credit cards. Though the rates are identical, you're paying a larger dollar amount of interest every month on the higher balance, so figure out an amount you can pay monthly that will bring down card #1's balance quickly while not ignoring card #2. Once the balances of the 2 cards match, pay for them equally until they are payed off. Then shift your attention to the cars. Car #1 is a higher balance, higher interest rate, and newer loan, so you're paying way more interest on car #1 than car #2. Take the money you were spending on your credit cards and consider this the amount that you can pay on top of your regular scheduled payments for your cars. Pay off car #1, then pay off #2.

It would help if we knew how much money you have to work with monthly to pay for these 4 things.

Yup. My way, he'd be completely out of debt in a matter of months. Your way, he'll MAYBE be out of debt sometime in 2014 (if he's lucky).

 

[blinelaxd27]

I am getting anxiety just reading this post... makes me want to stick with my 03 maxima for that much longer and never carry a balance on my cc... good luck man...

 

[thomas91169]

yeah i dunno about getting a personal loan to pay down a vehicle to market value. Even at market value, he still isnt guaranteed to sell it. However, you could always put it out there at lesser value than you owe, find a buyer, get a price down and then get a loan in that exact amount difference.

but this is why i opted to pay off the lesser CC and then put more money towards whichever car is closest to market value and getting that paid down, sold off and that income freed up.

Plus, in the age of craigslist, look around the house........you could probably sell off some shit you dont use and get some $$$ to help pay one of those down.

 

[SM0KE]

yeah i dunno about getting a personal loan to pay down a vehicle to market value. Even at market value, he still isnt guaranteed to sell it. However, you could always put it out there at lesser value than you owe, find a buyer, get a price down and then get a loan in that exact amount difference.

but this is why i opted to pay off the lesser CC and then put more money towards whichever car is closest to market value and getting that paid down, sold off and that income freed up.

Plus, in the age of craigslist, look around the house........you could probably sell off some shit you dont use and get some $$$ to help pay one of those down.

Ya, don't get the loan before the cars are sold. We're on the same page, I think. Say he sells car 1 for $24,000 and car 2 for 15,000. He'd get a personal loan from his bank for $4,500.00 to cover the difference so he could release the titles. At that point, he'd apply his car payment sized payment (at least $1,200.00) to the smallest debt and knock it out real quick, while making minimum payments on the other two. Once one is knocked out, go to the next. This route, he's debt free in less than a year.

 

[xenodragon]

Yup. My way, he'd be completely out of debt in a matter of months. Your way, he'll MAYBE be out of debt sometime in 2014 (if he's lucky).

Thats assuming he is going to sell the cars. If hes not then the other way is probably the correct way to pay off the debt. If he wants to do it fast, then he needs to offload the cars

 

[kball]

Thanks again for all the advice. After reading everyone's thoughts, I'm leaning toward trying to get rid of car#1. The wrench in the engine is we are PCSing to Germany from the states in 3-4 months. So, income will change until my wife finds a job over there. Plus, her car being a better winter car, I'd rather her keep her car and me drive the beater.