How should I prioritize paying off $7,300 in high-interest debt?

P

ParlaFakerXernil

New Member
Hello! I’m so excited a group like this exists. I’m good at a few things—money? Not one of them I’ve got about $7,300 to put toward this debt. I know the debt snowball method, sure—but those high-interest cards and loans? They worry me more. How would you use the money?
 
It may feel like it works against you to pay off the 0% interest debts first. But I would pay off the 3 smallest debts. That frees up over $500 monthly. Then start throwing that money at your higher interest debts.
 
For this debt, there’s only one answer. Pay off Cherry, Affirm, and Ashley Furniture. Use the rest on the Chase Credit card balance of $18,542, bringing it down to $16,800. That saves you $500 a month to throw at the Chase Card, so you’ll now pay $1,000 a month on that one. So on day one, you get rid of 3 accounts and pay the highest interest with the most money.
 
There are a few other methods besides snowball you could look at, but it all depends on your discipline.

First, the $7300. Pay off as many debts as you can and free up those minimum payments. I’d go biggest payment to smallest. Now you have more financial power.

Next, pick your method:
Snowball (smallest to largest balance)
Avalanche (biggest to smallest interest)
Domino (smallest to biggest balance/payment; include extra payments in the calculation)
Cash flow (biggest to smallest minimum payment)

See which debt order feels right to you. If you reply back with a debt order and how much extra you can pay per onth, I can run it through my spreadsheet and show you an estimated debt schedule.
 
I'd pay off the 3 smaller debts. I'm not always a fan of the snowball method, but that would free up the most for you monthly. 7500 won't pay off any of the high interest credit cards or loans.
 
I agree with what's above. Honestly, I've never really been motivated by interest even though I know it's what saves the most money over time. What gets me is the number of accounts dwindling, but the biggest thing for me is eliminating the highest minimum due. So in your case, I'd pay the three smallest accounts with the 7k and then work the snowball. You could look at transferring the cards to 0% interest, but you have to be disciplined enough to actually pay off in the time span. It's easier with a lower interest rate, of course. But don't transfer if you're going to be tempted to delay payoff or start charging up your original card again.
 
Back
Top