paying off debt what to do??

**bjl584** · 07-24-2014, 03:15 AM

I'm confused by your post.

So you decided to NOT buy a house and instead use the money to pay off debt?

How much debt do you have?

What do you mean paying off the car will lower your credit score?

**Bob B.** · 07-24-2014, 05:10 AM

Originally posted by ramz28 View Post

Hi every1.. im am very confused on paying off debt. Myself and my fiancee are looking to purchase a house but our credit is very low and we have too much debt to afford it. We have decided to use our down payment to pay off debt. We spend 2200 a month in credit cards and car/student loan. We have 15k to spend. If we pay off the higest monrhly payment it would be 600 to the car. Then take the 600 and put it on the highest card. But that will lower our credit score. We can pay off several credit cards but will only recover 400 in monthly payments. What should we do? Thanks!!

You'll get better advice from the group if you list all your debts - total balance, interest rate, monthly minimum payment.

In general, you will clean up your debt fastest if you concentrate on paying off your highest interest rate debt first, and make minimum payments on everything else.

I'd also suggest that you list your monthly income, your fiancee's monthly income, and all monthly expenses. If you list a lot of detail about your expenses, you will get the best advice. The group can do a great job of suggesting where expenses can be cut.

Good luck, and we hope to hear back from you soon.

**juvy** · 07-24-2014, 01:52 PM

You must budget. You should not spend more than what both of you are getting. Both your income must be sufficient to defray all your monthly expenses.

**Kabe** · 08-02-2014, 09:24 AM

Great news! I've been in a similar position and I was lucky to have some great people to help guide me.

I had some credit card debt and I wanted it to go away asap. I've always worked really hard to have a great credit score and it wasn't even damaged a little bit. But it required me to work really hard and make cut backs.

The first thing I did was stop buying crap I didn't NEED. Do you NEED that morning coffee? Most people say yes, but would they die without it? No. So the answer is no. $2/day over 365 days is over $600 (or one car payment).

Second, let people help. If you have supportive family, let them know what you're doing and maybe go over for a free meal every now and then - left overs are your friend (and there's nothing wrong with left overs.. especially if you put them into sandwiches!).

Third, I leveraged everything I had and put it on the credit card with the highest interest rate. If you pay $350/month in interest on ONE credit card, imagine being able to put that towards the second credit card and how much faster it'd get paid off. Get your fiance to help, or you can help her first, whoever has the highest interest rate. Then start knocking them off one at a time.
For me, I did something that my FA didn't really like but it worked.. I took out my RRSP (registered retirement savings plan investment) money and put it on my credit card. Yes, there was a heafty deduction fee of about $900, but it allowed me to pay off $7,000 instantly. BUT BE CAREFUL: Those often come with tax savings so when you file your tax the gov. will want their money back. I had enough time to work my butt off and pay it back in time, and extra (since I had no more interest to pay).

Fourth, work like a mad man. Find ways to make more money. You can't escape long hours at this point, just make sure those hours are spent wisely. For me I took two paths: First, I worked 16hour days 6 days/week - the only reason I didn't work a 7th is because it is illegal here haha. The second path was more passive. I created content and sold it on the internet - the content took a lot of time to make but it was an instant $5,000 pay out, and an additional $1,000 every month.. I now put very little time and effort into that stream.

To be clear: I still have a $500 car payment, I didn't touch that since it was manageable (its my next task, but now I don't need to work super hard). I never missed a payment; not once! And I would say NO, do not put your car payment onto a credit card. Missing one payment stays on credit reports for a long time.. Earning $600 between 2 people in 30 days is very achievable.

Stick with it. It sucks at the time but if you're cheap and work hard (and steady) you'll break free of your debt quickly. At that point you can rebuild your savings account and the banks will look at you and see that you have no more credit card debt and missed no payments.

Good luck my friend!

**Sain1988** · 08-23-2014, 04:50 AM

I have personally worked with a company [link removed by moderator] when I lost my business. They just helped me through the steps to make sure that I was able to get my situations in order – something that had obviously been woefully lacking with me. Perhaps you can sign yourself up and get some help as well, regardless of where you go, you need to start taking steps to getting yourself financially healthy.

**wenice** · 09-11-2014, 05:53 PM

Getting out of debt is not that easy but if one is really serious about it, I know that it can be done. I don't have debt even though I don't have too much savings and assets as well. I think that the first thing that you have to do is to settle all your debts before planning to purchase another thing from your credit card. I have a credit card before but now I'm no longer using it because it can only imprisoned me from continuously paying debt.

**Eagle** · 09-11-2014, 10:06 PM

Considering this thread was started so long ago and the OP hasn't returned I'm not sure how interested they were in getting help... ?

**WillieGearhart** · 10-09-2014, 05:52 AM

You should need to manage your budget. First of all concentrate on paying all your debt.

**YolandoAmaya** · 10-13-2014, 12:16 AM

Hmm, I am thinking you are able to spend 2200 months, the highest monthly payment it would be 600 to the car, but what about your home planning, you have not mentioned anything about it.

paying off debt what to do??