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I have credit card balances that I am trying to pay off and also a first and second mortgage. My business income is taking a dive so I am going to start coming up short. Most standard advice on debt repayment is to pay the highest interest credit card balances first, snowball the payments and move on to the next one on the list, leaving the mortgage to last. I'm concerned that I will get the credit cards paid and lose my house to foreclosure. I would like to hear from anyone who has insight into this situation. Shouldn't I concentrate on my home and paying down the mortgage as much as possible rather than working on the credit cards?




Hiya darcpa and welcome to the community! Just my opinion but, the mortgage and living expenses should come first and foremost.

Sub: #1 posted on Thu, 07/10/2008 - 17:11

Shazzers Shazzers
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I agree with shazzers. You need to have shelter and food, then you can worry about your other bills. Call the toll free number on this site and speak to a representative who may offer you some guidance on where to go from here. Good luck to you, it is unfortunate that our economical situation is in the crapper that it is affecting absolutely everyone.

Sub: #2 posted on Thu, 07/10/2008 - 18:12

ladybug ladybug

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Pay secured debt first i.e. house and car loan. Pay food and utilities next. Pay any other essentials and pay unsecured debt last.

If you have left over money for unsecured debt I would recomend paying off from smallest amount owed to largest amount owed and not pay to much attention to the interest rates. If your credit is good and you are not defaulting on the credit cards then make sure to pay all your mininums first and then throw that extra money at the lowest bill. If you are forced to default on some of them then don't bother sending those anything and try to work on the smallest bill. As you clean away the smaller bills you will have more money to pay toward the larger ones.

This is a psychology approach in that you will feel like you are making progress as you clear away entire accounts as opposed to having a bunch of little debts floating around because you are to busy trying to pay off the one really large debt that might be a couple interest points higher than the smaller debts.

Sub: #3 posted on Thu, 07/10/2008 - 20:06

DOLLARSandSINCE DOLLARSandSINCE
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BUT if you have a card with a much higher interest rate than the others, work on paying THAT one off before the others. I have a few small cards with low balances and low apr's, and then one big balance card with double the APR of the other cards, so when I have the money, I'll be paying that high interest card off first. Good luck!

Sub: #4 posted on Thu, 07/10/2008 - 21:41

smo65d11 smo65d11

(Posts: 1468 | Credits: 133.12)

Quote:

BUT if you have a card with a much higher interest rate than the others, work on paying THAT one off before the others. I have a few small cards with low balances and low apr's, and then one big balance card with double the APR of the other cards, so when I have the money, I'll be paying that high interest card off first. Good luck!


This is opposite what I suggested. Math wise it calculates out better but emotionally wise you will feel better going the route I suggested because you will see a hard coded progress each time you eliminate a bill. The only way I would go after a big one first is if there is a huge discrepancy in the rates like 30% to 10% and even then the annual dollar difference probably won't be that much depending on your balances between the two. I would have to see the balances and rates before I made a final decision though.

Sub: #5 posted on Fri, 07/11/2008 - 01:39

DOLLARSandSINCE DOLLARSandSINCE
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in my case it is $7500 @ 29% and $750 @ 16% ...

Sub: #6 posted on Fri, 07/11/2008 - 02:18

smo65d11 smo65d11

(Posts: 1468 | Credits: 133.12)

The spread between 29% and 16% is 13% or roughly 1.08% per month so it would cost roughly 1.08% extra per month on the difference of what you paid. For example if you paid $50 to the larger it would be like sending $50.50 to the smaller meaning it cost you an extra .50 for that month on a 50 dollar payment. The calculation is a bit more complicated then this since it would compound month to month based on the payment per month and the time frame but if it were my debts I would probably actually go after the $750 one first because I know I could pay it off in less than 6 months. If you went this route it would actually cost you an extra $50 or so in that 6 month time period not counting compounding. I figured that as 750 x 1.08% x 6 months. I know mathematically this doesn't make sense but it really helps people that are struggling underneath a lot of debt spread accross a lot of sources because when 1 is gone they see it as progress more so than seeing an extra $50 saved or whatever on a balance that went from 7500 to 6750 as progress. If you are more a numbers type though then the math is deffenitely in the favor of paying off the larger balance at the higher rate since that 750 taken over 3 years would save you a few hundred dollars if it were applied to the larger rate.

Sub: #7 posted on Fri, 07/11/2008 - 02:43

DOLLARSandSINCE DOLLARSandSINCE
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you make sense, but I am a real numbers person, so I'll tackle them in percentages I think ... how about if I pay them down in percentages ($20 on the $750 card, $200 on the $7,500 card)?

Sub: #8 posted on Fri, 07/11/2008 - 03:32

smo65d11 smo65d11

(Posts: 1468 | Credits: 133.12)

Well technically any money you throw at the $750 would cost you a very small amount extra in interest because of the difference of interest rates. If the cards are current you will have to at least make the minimum payment though. If your credit is decent then you might consider trying to transfer that $7500 to the lower rate especially if you can get the company you owe 750 to let you transfer the 7500 to them.

Sub: #9 posted on Fri, 07/11/2008 - 18:27

DOLLARSandSINCE DOLLARSandSINCE
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(Posts: 1078 | Credits: 137.97)

they wont increase the credit line, I already tried that

Sub: #10 posted on Fri, 07/11/2008 - 21:00

smo65d11 smo65d11

(Posts: 1468 | Credits: 133.12)

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