Overwhelmed

**aljen01** · 02-01-2012, 09:58 PM

So, we have had a rough couple of years (as everyone has I know) but now that my hubby has a great, steady job I don't know what to tackle first. So, thoughts on this?

Credit Line $7000
Credit Card 1 $15562.05
Credit Card 2 $10289.39
Credit Card 3 $10457.27

On top of this we have a mortgage, that we just upped our payments on so that is $850 every other week and we have a car loan that is $515 once a month. And of course we have our other household expenses, gas, electric, food, phone, cell phones, town bill, taxes, insurance, etc.

My husband is an electrician and started at a new company in February of last year, since then he was made Foreman and now Superintendent. He is going to be getting a great raise and I want to make sure that we use it the best way we can and get RID OF THIS DEBT....ALL OF IT!

You all seem like a very knowledgeable group and I'd like to know what the best way to tackle this would be?

Thanks

**Contrary Housewife** · 02-01-2012, 11:38 PM

Make a list of all expenses. Every one. Down to the penny.

You should then have a good idea where you can trim spending.

Anything that does not go to food, mortgage and home repairs, car payment and maintenance, utilities and medical should be going into debt payments.

You probably also want to set aside an amount each week to go into an emergency fund. How much is up to you, but the idea is to have enough cash to cover a major car or home repair, emergency trip to the hospital, or 3-6 months unemployment.

**Russ** · 02-02-2012, 04:35 AM

Everything CH said.

List all your minimum payments, including the minimum mortgage payment. You don't want to pay extra towards that because it probably has the smallest interest rate and will take the longest to pay off.
You want to use that extra money to get rid of those CC's.

And welcome to Frugal Village!

**mombottoo** · 02-02-2012, 08:15 AM

Originally Posted by Russ

Everything CH said.

List all your minimum payments, including the minimum mortgage payment. You don't want to pay extra towards that because it probably has the smallest interest rate and will take the longest to pay off.
You want to use that extra money to get rid of those CC's.

And welcome to Frugal Village!

What he said

. In my world I have always started with house (rent or mortgage pymt., prop.taxes & house insurance), utilities (heat & electric), food, car (although we've only ever had a car pymt. once and that was back in the late 70s) & car insurance...then the others.

Income - expenses = money left over to work with to reduce debt and add to savings. Initial expenses should already include some savings as you should pay yourself first we used to have $25 per week go into a regular savings acct. & at first 2% went into a 401(k) until we finally maxed out the 401(k) at 16%.

**Ceashels** · 02-02-2012, 08:47 AM

Welcome to the Village, all the advice so far is what I would have said too.

**josantoro** · 02-02-2012, 09:12 AM

you didn't say what kind of interest rates you are paying on the credit cards. I would pay off the ones with the highest rates first, or can you roll them over onto a lower interest rate balance transfer?

I am assuming you used the credit cards for emergencies when times were tough. Now that you are financially more stable, try to change your way of thinking from "buy now- pay off later" to "save up money - then buy."

Even if you are getting something on sale, buying on a credit card and paying interest negates any savings you think you are getting.

Best of luck and congrats on the new job!!

**aljen01** · 02-02-2012, 05:30 PM

I was thinking about doing a balance transfer to a credit card with 0% interest, I've been looking around as I don't want the rate to skyrocket to 19% after the usual 6 months. I'll see what I can find

Thanks for all of the great advice, I really can't wait to tackle this and get it done!!

**my4littlebuffaloes** · 02-03-2012, 12:39 PM

Hi! I think you need to include our car payment in your debt totals and snowball. $515 is a huge amount for a car payment, you can't pretend it isn't there. I would figure up how much extra you have to work with each month after paying the minimums on everything and then start aggressively paying down the smallest CC. Not sure where the car would fit in with the CC, but put them in order by amount or interest (the amounts are so close to each other, paying the highest interest first might be the way to go). Good luck!

**frugalfoster** · 02-03-2012, 05:36 PM

Congrats on the new job....and now"s the time to pay off the debt!!

Sorry to hijack the thread....Russ take off the avatar gumdrops i'm dieting... :-)

**Russ** · 02-03-2012, 06:17 PM

Originally Posted by frugalfoster

Sorry to hijack the thread....Russ take off the avatar gumdrops i'm dieting... :-)

NOM NOM NOM What?

**bunnys** · 02-04-2012, 12:06 PM

As far as hitting the debt after the budget is made, they say you're supposed to go in reverse order of paying highest interest rate off first as you minimum payment everything else then when you finish one, start on the next.

But I recommend you first pay off the easiest/smallest one you can pay off quickly. Then, you'll be able to feel that sense of accomplishment before you move on to the biggest interest rate one 2nd and then follow as I originally stated.

Cut up all cards, though.