NBR: Budgetting

PMBridetobe · January 2012

If you were going to have an extra $$$$ for the next 2 months and than about $$$ extra after that for another 6 or so months, how would you use it to reduce debt? We are thinking of doing something ala D a v e R a m s e y but I am also a quick hit kinda girl. I want to see some momentum. I am all eyes for your ideas!

JJ&BB1146 · January 2012

I'm a Dave follower, so I think the debt snowball is a good way to go. You definitely see momentum that way. Pay off the smallest debts first, then use that money to put towards bigger ones, then move on to bigger ones, etc. Paying off 1 altogether and in my head thinking "that's one down" has more impact than just putting, say, $200 on one huge debt. Maybe that's just me. Good luck!

MrsMillerTime · January 2012

We are paying ours down starting with the highest interest rates.

We have a budget each month that we put towards credit card bills - we pay the minimums on all cards and use whatever is left over in our c/c budget towards the card with the highest interest rate. The logic (for us) is to eliminate how much we're accumulating in interest surcharges since the card with the lowest balances also have the lowest interest rates.

PMBridetobe · January 2012

MrsMillerTime:

logic (for us) is to eliminate how much we're accumulating in interest surcharges since the card with the lowest balances also have the lowest interest rates.

This is my husbands logic. I just am having trouble seeing it. For example, I have a CC that is $40 a month and will be paid off in 3 months with a zero interest rate. We have another that is $150 a month but will take 24 months to pay off at 11%. To me, I would rather pay off the 3 month one and then through tht extra money on the other one.

Well... off to think some more.

MrsMillerTime · January 2012

PMBridetobe:
MrsMillerTime:

logic (for us) is to eliminate how much we're accumulating in interest surcharges since the card with the lowest balances also have the lowest interest rates.

This is my husbands logic. I just am having trouble seeing it. For example, I have a CC that is $40 a month and will be paid off in 3 months with a zero interest rate. We have another that is $150 a month but will take 24 months to pay off at 11%. To me, I would rather pay off the 3 month one and then through tht extra money on the other one.

Well... off to think some more.

But if you have a zero interest rate, why not let that account sit there while you use your money towards other accounts? Even 3 months worth of interest (on the other card) while you're paying off the first one is money that you're essentially tacking on to the bottom line of how much you're spending to get all your cards paid off.

For us, we have several credit cards that we're trying to close out so the interest accruing over multiple cards/months really adds up. We're trying to get out of these credit cards as CHEAPLY as possibly and we're not as worried about how long it will take.

And I promise I'm not trying to argue with you. Just having dialogue.

PMBridetobe · January 2012

Thanks T! I totally dont think your argueing.... it seems your are just better at stating the point than the hubby is

Your reasoning makes his approach (and yours!) make more sense because he is just sick over the amount of interest we are paying. We have two different money strategies but I pay the bills, etc. So I am trying to understand his point of view.

fjaril · January 2012

A few years back (before H) we had some debt and were actually paycheck to paycheck for a while. We paid the highest interest rates off first (any bonus/ tax refund etc) went to the debts.

We thought it made more sense to pay most expensive off first instead of paying the higher interest% for longer. Especially if you have a 0% interest, you aren't being charged for that.

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