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Thread: My sig explained (finally..and it's a fricken' novel)

  1. #311
    Maximum Bitrate eugenen's Avatar
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    Quote Originally Posted by edrex View Post
    Hey Wizard, I was just thinking about you this morning!! I have debt and my goal is to get 1/3 to 1/2 of it paid off this year. Watching your numbers drop has definately been an inspiration!
    What strategy did you use as far as choosing which debt to pay off first? I have heard to pay off the lowest balance, and also heard to pay off the highest interest.
    Here is my breakdown of debt:
    Credit Card #1 - $6,500 - 14% APR
    Credit Card #2 - $2,800 - 0% for a year
    Credit Card #3 - $1,400 - 0% for a year
    Auto Loan - $6,500 - 13% APR
    Boat Loan - $10,400 - 19% APR

    I will probably be getting about a $3,500 tax refund and I need to form a plan on where to send that (its all going to debt) and then which one should get my extra money each month (I send off anywhere from $100 to $500 extra each month).

    Cheers buddy, and great job on nailing your bills!!

    ed.
    IMHO even though the boat is the highest interest its probably on a traditional loan where you pay for example $300/month for three years, same with the car loan. Those type of loans the payment is fixed for the duration of the loan so even if you pay the whole $3500 toward it then you still have to pay the same amount out per month, though long term you will pay the loan off sooner. Credit cards the minimum payment changes depending on the balance so paying extra on them lowers the amount you have to pay each month so you can keep that extra as play money or put it toward one of the other loans.
    So I would pay off the smaller ones as the $3500 could almost get them both, then a little bit more to finish them and they are done. Close those accounts then. Now you have freed up those minimums and could pay that much toward a higher interest loan.
    Thats why a lot of people do it this way, when you sit down and look at your budget and see the list of bills get smaller it gives encouragement.
    Thats why my mp3 system is still sitting in a box, I've been paying $260 /per pay on a loan whose minimum payment was $130 per month. I calculated it out and at this rate it will be paid off in March 2009.

  2. #312
    Bowel movement jjh221's Avatar
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    Quote Originally Posted by Quattro View Post
    He's from *
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  3. #313
    Bowel movement jjh221's Avatar
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    Quote Originally Posted by edrex View Post
    Thanks JJ! All good info/links!
    I'm more concerned about paying less in interest then I am at increasing my Credit Score (its pretty middle of the road right now, so not bad, not great).
    As an example of why I will probably try and tackle the boat first: Of the last payment I made ($287), $106 went to paying off the balance and $181 went to interest. These numbers start to change over time, as the principle goes down the interest number drops and more of your payment goes twards the balance. So I think putting the tax refund twards the boat will do alot in turning those numbers around.
    Now, I know what you are all thinking, and the answer is: Because its worth $287/month to me to have a boat for my family! Thats the whole point of credit, you know you will pay more for something in the end, but you weigh that out with how much it is worth to have it now.
    Thanks again JJ,
    ed.


    ps: I'm in the US. West Chestinghamshire is a joke from the original My Thread!

    yep i totally understand, im just not a believer of credit spending. Id prob do the same thing at times, its really seems worth it. I also try to remember if i die someone has to pick up where i left off.
    I GIVE FREE HUGS!
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  4. #314
    Unregistered User ODYSSEY's Avatar
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    Quote Originally Posted by eugenen View Post
    IMHO even though the boat is the highest interest its probably on a traditional loan where you pay for example $300/month for three years, same with the car loan. Those type of loans the payment is fixed for the duration of the loan so even if you pay the whole $3500 toward it then you still have to pay the same amount out per month, though long term you will pay the loan off sooner. Credit cards the minimum payment changes depending on the balance so paying extra on them lowers the amount you have to pay each month so you can keep that extra as play money or put it toward one of the other loans.
    So I would pay off the smaller ones as the $3500 could almost get them both, then a little bit more to finish them and they are done. Close those accounts then. Now you have freed up those minimums and could pay that much toward a higher interest loan.
    Thats why a lot of people do it this way, when you sit down and look at your budget and see the list of bills get smaller it gives encouragement.
    Thats why my mp3 system is still sitting in a box, I've been paying $260 /per pay on a loan whose minimum payment was $130 per month. I calculated it out and at this rate it will be paid off in March 2009.
    But if he pays more than the $300 a month, the difference goes towards the principal. The more you pay down your principal, the less interest you will pay. Sure you can get rid of the lower smaller debts, but you will acquire more interest on the higher interest debts.

    Pay off your highest interest debt first, no matter the amount. Pay the minimum amount towards all other debts. All extra money goes towards the highest interest debt.

    Work your way down the list and more important do not acquire any new debt.

    Boat Loan - $10,400 - 19% APR
    Credit Card #1 - $6,500 - 14% APR
    Auto Loan - $6,500 - 13% APR
    Credit Card #2 - $2,800 - 0% for a year
    Credit Card #3 - $1,400 - 0% for a year

    Another thing is to cut out unnecessary monthly expenses (really take a look at your needs). Even if it is an extra $20 a month, that is $20 more going towards your debt.

    Edit: Also if you boat/auto loan is setup on monthly payments, make sure that any additional amount is applied towards your principal.
    ODYSSEY

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  5. #315
    FLAC edrex's Avatar
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    You all are the best!
    Thanks for the advice, I'll keep you posted on how it works out (but probably have to start my own debt thread so I don't completly hijack Wizards!).
    Cheers,
    ed.
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  6. #316
    Maximum Bitrate Sidewalksalvage's Avatar
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    Quote Originally Posted by edrex View Post
    You all are the best!
    Thanks for the advice, I'll keep you posted on how it works out (but probably have to start my own debt thread so I don't completly hijack Wizards!).
    Cheers,
    ed.
    LOL "debt thread" I hope for the financial security of all those on mp3car.com that everyone doesnt want a debt thread as well

    Good luck with it though!
    Brown 2010

  7. #317
    FLAC edrex's Avatar
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  8. #318
    Low Bitrate DavidIQ's Avatar
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    Quote Originally Posted by ODYSSEY View Post
    Pay off your highest interest debt first, no matter the amount. Pay the minimum amount towards all other debts. All extra money goes towards the highest interest debt.
    I've actually heard of another method...pay off the lowest balance first and work your way up. In this case it's in his best interest to pay off the lower balances since it's much easier and his APR will go up way before he gets that boat paid off. Once that's done he can apply all payments done to the now zeroed out accounts to the larger accounts instead. This works great as a morale boost and you're more likely to stick to the debt reduction plan once you see that it's "working".
    -David IQ

  9. #319
    FLAC edrex's Avatar
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    UPDATE:
    So, I just did taxes for myself and my girlfriend. We are getting a combined $7800 refund.
    I have decided to go a safe route by paying off my credit card with a $5527 balance first. Even though the boat is higher interest, this is a safer move, because if I put it twards the boat, I will still have the same payment each month. If the credit card goes to $0 then I will have it for emergency purposes, and can apply the extra $230/month I would have been paying to it somewhere else like the boat.
    This will leave us with roughly $2200 leftover. With that, we need to make a couple repairs on her Durango, and then whatever else is left over will most likely go to the boat loan.

    Thanks to everyone who chimed in here with advice for me. I weighed out everything I read from you guys and came to what I think is going to be the best way to tackle it.
    Thanks again to Wizard for sharing your experience here!


    Cheers all,
    ed.
    Spent so far: $1,755
    Check Out My Work Log for Specs/Pics
    CarPC Progress[!!!!!!!!!!!!!!].....Installation[---------+].....Pastrami Progress[!!!!!!!!!!!!!!]
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  10. #320
    Low Bitrate DavidIQ's Avatar
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    Quote Originally Posted by edrex View Post
    UPDATE:
    So, I just did taxes for myself and my girlfriend. We are getting a combined $7800 refund.
    How much in total W/H taxes did Uncle Sam take out to begin with????
    -David IQ

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