I have read several competing theories on the best way to tackle outstanding debt and can’t decide what the best method is for me… I have a couple of credit cards with lower balances and lower interest rates and a credit card with a higher balance and a higher interest rate. I also have student loans with really low interest rates but a high balance. Per debt snowball I would tackle my debt from lowest balance to highest despite they varying interest rates, but I’ve read in several places that my focus should be on eliminating debts with high interest rates ASAP. What have you all tried and what would you suggest?
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I needed to see progress, so I found that the snowball method worked for me. It’s very motivating and I think that we need that when working to pay off debt. I loved being able to cross off debts on my list.
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I focused all extra $ on the higher interest rates first after making minimum payments on the other cards. If I happened to find one month that that extra $ would pay off a smaller card, then I would pay off that smaller card that month. It really is just a preference as to what is going to keep you focused on paying them off.
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TAYLOR MORAN with me i’ve paid off some of my lower
cards first and put that money onto another card i’ll be
doing this until they are all paid. Because i’ve tried to pay
more than the minimum amount on my higher credit card and
ended up paying a higher amount on the card which i couldn’t
afford so seeing small gains by getting the small ones paid first
is good for me.
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For me, the key is getting a handle on spending. It’s so obvious, but tough for some folks, to spend less than you make. I have 2 credit cards. 1 I use and the other is just used occasionally to keep active. The one I use is for purchases that I am able to pay for as soon as the amount gets posted. It’s a points card so I use the points to pay down any balance I may have. We’re getting ready to go on an overseas vacation, but I plan to pay that card off within a week of getting back home. It can be done. The key thing is to remember not to spend more than you make.
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Clark.com had your answer. Clark Howard has been a financial guru based in Atlanta for more years than I can count.
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i’m no expert. i’ve been working retail off and on for 28 years. I personally like the snowball effect. where you pay off the highest interest credit card, while still paying the minimum on the others and work from there. once you get the highest interest card paid off, you work on the next one, being able to put the increased money that you have bc you already paid off the one w/ the highest interest. I also like the idea of taking the cards out of your wallet
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Lynn Rosenfeld posted:
Clark.com had your answer. Clark Howard has been a financial guru based in Atlanta for more years than I can count.
The only thing I not a fan of is Clark hates debit cards. Other than that I like his show.
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Dave Ramsey has a snowball program too. He says pay off the smallest balance first. By paying as much as you can monthly. All others just pay the minimum. Then apply that payment to the next highest balance and so on. Interest rate doesn’t really matter because you will hopefully be paid off before too much time passes.
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FRIARDAVE I think that is the easy way to. At least for me
you realize that Ramsey has declared bankruptcy more than once. therefore he doesn’t always follow his own advise. the snowball method is that you hit the one w/ the highest interest and you hit it the hardest, while paying the minimum on all the rest. nowhere does Ramsey or anyone else, tell you to do things to cut costs at the same time so that you have extra money to throw at your debt. sometimes you need to know the story behind what they say.
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socgirl posted:
you realize that Ramsey has declared bankruptcy more than once. therefore he doesn’t always follow his own advise. the snowball method is that you hit the one w/ the highest interest and you hit it the hardest, while paying the minimum on all the rest. nowhere does Ramsey or anyone else, tell you to do things to cut costs at the same time so that you have extra money to throw at your debt. sometimes you need to know the story behind what they say.
He fully discloses his BK. It was about 30 years ago. He teaches people how not to do the same thing he does. You have his snowball method incorrect. You may want to look it up before posting.
Oops. He teaches people how not to do the same thing he DID.
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I have considered both methods when it comes to my personal credit cards but I have not really followed a specific method.
My approach has been to pay as little interest as possible and so I tend to go for the card with the highest amount in interest.
But up until recently, I wasn’t really paying any money in interests as I was able to open several different cards over time and utilize their 0% intro APR offers. I then would focus on paying off the ones that the offer was going to end soonest and only pay minimums on the ones that didn’t charge any interest.
I was able to make it by doing this for quite a while and even did a balance transfer to a new card to avoid paying interest.
Finally my Amazon card started charging me which is why I just recently paid that off completely. Now, we are down to just one major card and two with smaller balances and they are coming up on the time to pay interest but we will be hopefully getting those paid off shortly and should be able to avoid a lot of interest.
Though I would not recommend getting as many credit cards as I did, it was definitely helpful in avoiding having to pay a lot in interest and now that we are getting them paid off, we have learned our lesson and hopefully won’t have to face that problem in the future!
@friardave for future reference, if you need to change something on your post, you can click on the “Take Action” button in the bottom right corner and you should be able to “Edit” you post. Hope this helps!
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Thanks Moore
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