Debt reduction with big ones

pammy · 10-21-2005, 10:47 PM

I read how people suggest writing down all the debts, putting the smallest first on to the biggest. I've done this. So what happens when you smallest debt would still take a very long time before it's paid off, thereby delaying that quick satisfaction that something you are doing is actually working. As things stand now, if my newer car does not sell and we have to pay it down or off, my actual lowest debt is still over $10,000. There is no immediate gratification or desire to continue if it's years in the making. Make sense?

Does anyone out there know the boat I'm in and what have you done to help or combat this? Please help!! I just don't want to get discouraged too soon cause I'm not seeing any results and won't for a very long time. I just don't have any small ones to start with. Advise or wisdom?

SHOPGIRL · 10-21-2005, 10:51 PM

Well, first of all, congratulations! It looks as if you are credit card debt free. That being, the absolute worst debt, at least in my opinion.

I think your debt is good debt. I think most of us talking about paying off the small debt first...we're thing cc debt.

You are luckier than you think! Just start paying extra on one of your debts, say the RV and watch how each month you owe less and less.

Jenna · 10-22-2005, 02:14 PM

Are there any expenses you could trim from the budget? What about a second job two days a week?

How often are you paid? Every two weeks? Have you tried splitting your payments in 1/2 and sending them in each time you are paid?

I was able to knock down my car note by getting a second job, and mailing off a small payment each time I received a paycheck. An extra $50-$100 or more a month can do quite a bit. With my second job, I get a paycheck every week.

What's the APR on your debts? I would pay off the highest APR, first.

Valerie in WA · 10-22-2005, 02:27 PM

As far as gratification, here's what I do: I keep a list of where my debts were when I started (started keeping track, that is) and what the balance is each month. I've also been keeping track of how my EF is growing. I can look periodically and see that I'm make progress.

duckduckgoose007 · 10-22-2005, 02:38 PM

We have no debt...but our car was paid off this month, so starting on the 9th of Nov., I will be putting the same amout into our savings account each month.

sanderson76 · 10-22-2005, 03:28 PM

Quote:

Originally posted by Valerie in WA
As far as gratification, here's what I do: I keep a list of where my debts were when I started (started keeping track, that is) and what the balance is each month. I've also been keeping track of how my EF is growing. I can look periodically and see that I'm make progress.

This is what we are doing per say. I have entered everything into Microsoft Money and have it set by how much I can pay a month and then track it to start seeing how it has shrunk.

sunshine · 10-22-2005, 04:24 PM

I'm a visual person. . . so I made charts/graphs and paper chains (the chains of debt) to mark our progress. Each link of the chain is $100. We cut off a link when we pay down that much debt. $1000 links are a different color (silver for us). So we see progress at intervals.

Mumzy · 10-22-2005, 08:28 PM

Sunshine, How clever! A chain. I am a visual person as well. I always used the thermometer and filled in the red.

kmsinsa · 10-22-2005, 10:39 PM

I love the chain idea..that's a great idea

canadian gardener · 10-22-2005, 11:25 PM

there are two ways to do snowball reduction

smallest debt first, which you mentioned

and

HIGHEST INTEREST first, which might be an alternative, since it means that you'd be seeing progress in a different way.

I totally agree with the visual stuff. I think having a printout and ticking off progress and seeing just how the principal (non interest part of the debt) is getting chewed away at might help.

Snowball stuff starts slow, but the reason it's called snowball is once it's been going a while it really gathers steam.

pammy · 10-23-2005, 10:07 AM

Hey thanks, a visual might really help or a chart showing.

And the higher interest part, you all are right. Just yesterday I realized my list is a bit messed up. I had it down to pay off the student loan before the mortgage, but it doesn't make sense. The house is at 8.5% (not fixed, it's variable, not good) and I just locked in my student loan at 5.5% by consolidating. So it makes tons more sense to work on the house mortgage before the student loan.

The car and rv loan are the only other two. I've got the car up for sale, hopefully it will sell soon. That will untie a hunk a month to really start working things down. We are still debating on the rv, we love it dearly! But.... I see another huge chunk a month going towards that. In a family of campers we would really 'like' to keep one (notice, I no longer say 'need'). I've given myself a few months to decide whether to keep it and pay it off, or sell it (I owe less than it's worth) and buy something older/smaller outright. (you guys are my sounding board when I debate things with myself, lol, so excuse any ramblings. It's good for me to type it out)

PrairieRose · 10-23-2005, 01:31 PM

Another thing that Dave Ramsey advocates is to have a garage sale.... apply the money toward the debt you're working on. Or do some babysitting, etc., apply the money to the debt you're currently attacking. I like to look over our "where we came from and where we are now papers". You should see the scribbling I did on those papers! They make me feel so good I've thought about framing them (in cheap walmart or garage sale frames ofcourse!

).

zakity · 10-23-2005, 03:50 PM

Yeah, but the RV, if you use it alot and can save on the price of a hotel, then it might be worth it to keep. We are discussing rv trailer thing right now, because it would save us the price of a hotel when we travel. But then, we have to figure out if we travel enough really (or would travel if we didn't have the price of the hotel to factor in) to justify getting one.

sarahsmile · 10-26-2005, 05:50 PM

i am definetly going to do some charts. my hubby got laid off and now we are a 4 person one-income family in a more pricier area of our city. i DEF need the visual progress or i get discouraged and start spending.

also, to save on hotel rooms when we travel, we bought a VERY old but in great shape pop-up camper. we paid $450 cash for it, adn the kids love it. no there isnt a bathroom or shower but when you are traveling, how much time do you really spend in those places? quick ins and outs in the showers/bathrooms at the campgrounds arent so bad when you think of all the money you save!