Debt Snowball

**txmike1984** · 01-10-2012, 09:28 AM

I am going thru Step 2 - Debt Snowball - and have a quick question.

Here are my debts:

150 - Medical Bill
160 - Medical Bill
237 - Medical Bill
160 - Medical Bill
237 - Medical Bill
500 - Medical Bill
572 - Medical Bill
643 - Visa
959 - Gap
2960 - Medical Bill
3679 - Medical Bill
7000 - Family Loan
12500 - IRS
96000 - 2nd Mortgage at 9.5% - that is a correct # - 15 years left
143000 - 1st Mortgage at 8.6 - correct # also. - 25 years left

We have a ton of medical debt because of a disabled child.. 50 surgeries plus over the last 15 years.. more to come.

According to DR he says to pay off all the small debts first. However I keep looking at our 2nd mortgage at 9.6%.. I would love to pay that off 1st. We used it to consilidate medical bills a few years back.

My question is: Should I pay off debt in the order I listed? It will take years but I want to stick to a plan. Step 1 is complete - Have 1k in the Bank for emergencies. Yahoo

Thanks for the help

Mike

**tmjsquared** · 01-10-2012, 09:38 AM

Mike - are you paying anything on the other debts listed? Also, do you have a payment plan with the IRS?

DR says to payoff the smallest debt first in order to have "quick" victories to increase your motiviation. More of a psychological thing. How long do you estimate it would take you to pay off the first 9 debts (smaller medical bills) if you started with those first.

**Uniwolf** · 01-10-2012, 09:47 AM

My questions are pretty similar to tmjsquared's do you make payments on each bill? How quickly can you pay the first one, and take it and pay off the second one. Thus having 2 payments to add to the 3rd, then 3 payments to add to the 4th. Hubbs and I don't do DR, but do use some of the princaples of his plan. The more of the small ones that you pay off, quickly, the more you have to "snowball" into the larger ones, thusly actually making them pay of faster. Can you re-fi the 2 mortage's for a much lower interest rate?

**Greebo** · 01-10-2012, 10:14 AM

Originally Posted by txmike1984

According to DR he says to pay off all the small debts first. However I keep looking at our 2nd mortgage at 9.6%.. I would love to pay that off 1st. We used it to consilidate medical bills a few years back.

It's going to take a long, LONG time to pay off the 2nd mortgage in contrast to those little bills, and paying off those little bills quick will give you a significant sense of progress.

My question is: Should I pay off debt in the order I listed? It will take years but I want to stick to a plan. Step 1 is complete - Have 1k in the Bank for emergencies. Yahoo

It'll take years, either way. Doing it the DR way helps you build up the conviction to stick it through the years.

**Cricketlegs** · 01-10-2012, 10:18 AM

I myself am wondering about the medical bills. There shouldn't be any interest on those. Given just the information listed I would make regular medical payments but try and hit the Visa the hardest first.

That being said, if you can't get anywhere with the Visa until you free up some money by getting rid of the medical bills then yes, take that route.

I would let the mortgages just go along at the minimum payment as they are so large and everything else has a much nearer ending date.

**Greebo** · 01-10-2012, 10:38 AM

Since this is the DR subforum, my answer to the "interest" argument is this isn't about math, it's about behavior. Fix the behavior and the math will follow - if we'd been worried about math we wouldn't have the CC debt to begin with.

**Uniwolf** · 01-10-2012, 11:46 AM

This is a break down of where you would be in 21 months assuming that you pay $50 per bill everymonth on each of the 1st 9 bills, you have 2 exact amounts listed right below each other, I did not count those in hopes that they are duplicates. On the 21st month you would have $16 toward your first of the 10th bill. Hope this makes sense.
150 160 237 500 572 643 959 2960 3679
1 100 110 187 450 522 593 909 2905 3629
2 50 60 137 400 472 543 859 2855 3579
3 0 10 87 350 422 493 809 2805 3529
4 0 0 0 237 372 443 759 2755 3479
5 0 0 0 37 322 393 709 2705 3429
6 0 0 0 0 109 343 659 2655 3379
7 0 0 0 0 0 152 609 2605 3329
8 0 0 0 0 0 0 259 2555 3279
9 0 0 0 0 0 0 0 2155 3229
10 0 0 0 0 0 0 0 1755 3179
11 0 0 0 0 0 0 0 1355 3129
12 0 0 0 0 0 0 0 955 3079
13 0 0 0 0 0 0 0 555 3029
14 0 0 0 0 0 0 0 155 2979
15 0 0 0 0 0 0 0 0 2684
16 0 0 0 0 0 0 0 0 2234
17 0 0 0 0 0 0 0 0 1784
18 0 0 0 0 0 0 0 0 1334
19 0 0 0 0 0 0 0 0 884
20 0 0 0 0 0 0 0 0 434
21 0 0 0 0 0 0 0 0 0

*sigh* spread sheets do not copy well into here, You may be able to unscramble it better if you copy it out and throw it in excel. Bottom line is on month 22, you would have $450 extra going to your next big payment plus its normal monthly payment.

**mndtrp** · 01-10-2012, 09:05 PM

Since you're in the DR forum, list them from smallest to largest, and get to snowballing.

**Palooka** · 01-10-2012, 09:26 PM

I would definitely knock out the small bills first. Less stress and less to deal with.

**chris w** · 01-10-2012, 09:33 PM

As Dave recommends pay minimums on all debt and throw everything at the smallest debt. However, I see the KGB, I mean the IRS, he does recommend getting that paid off the fastest, even if it means borrowing money to get rid of them.

**qsaver704** · 01-12-2012, 01:02 AM

Originally Posted by chris w

As Dave recommends pay minimums on all debt and throw everything at the smallest debt. However, I see the KGB, I mean the IRS, he does recommend getting that paid off the fastest, even if it means borrowing money to get rid of them.

DAVE SUGGESTS YOU BORROW MONEY TO PAY OFF ANYTHING??? Strange to me! Not calling you wrong, just seems against everything he stands for!

**mateosbaby** · 01-13-2012, 10:28 AM

Originally Posted by qsaver704

DAVE SUGGESTS YOU BORROW MONEY TO PAY OFF ANYTHING??? Strange to me! Not calling you wrong, just seems against everything he stands for!

Only the IRS. Yes, I've heard (read?) that, too. And I don't blame him for saying that. If you owe them, they can literally ruin your life for many, many years. Get them off your back ASAP.

**Greebo** · 01-13-2012, 03:01 PM

Originally Posted by mateosbaby

Only the IRS. Yes, I've heard (read?) that, too. And I don't blame him for saying that. If you owe them, they can literally ruin your life for many, many years. Get them off your back ASAP.

Correct indeed.

The debt to the IRS is already debt, so borrowing money to pay them off isn't NEW debt, its transferring debt, something Dave doesn't object to when it makes sense.

Which with the boundaryless, overpowered, ruin your life cause they can IRS, is yesterday.

**my4littlebuffaloes** · 01-15-2012, 03:22 PM

I am assuming you have a payment plan with the IRS. personally I would try to clean up some of the smaller medical debts first and then hit the IRS hard. I would probably move it up to #8 on the list, assuming you can get those smaller medical debts paid off pretty quickly. How much money do you have each month to throw at your debt snowball? That would make a difference in the order.

**mombottoo** · 01-16-2012, 03:27 PM

I see that you said the medical debt is due to medical issues for one of your children who is disabled.

Our son was disabled prior to turning 18 years old. He qualified for many different programs in addition to the insurance we had. One program is called Children's Health Services (formerly Crippled Children's Fund) here in Michigan but, it's a federally mandated program so a similar program should be available in your area. He also qualified for medicaid and still does.

There are many agencies and organizations that help families with medical bills when it comes to a child.