Hypothetical
This is for my brother.

If I guy had 30k in CC debt (mostly all the wife's fault) scattered over about 16 various credit cards all at high interest 18% to 26% and $17,000.00 to apply to said CC balances where should he start.

OPTION A: Pay off the four highest ones at 2800, 4000, 4200, 4700?

OPTION B: Pay off a little on all 14 cards just to knock down the balances and finance damage?

OPTION C: Start at the least one and keep working up until the 17,000.00 is gone?
256, 375, 419, 672, 744, 820, 843, 976, 1357, 1384, 1662, 2853 = 12361.00 Then the remaining 4639 scatter that to the remaining three cards.

He needs to keep 17k for divorce lawyer.

I would attack the smallest and work your uhhhh his was up to the next smallest. You get the satisfaction of knocking off cards as a reward. I wouldn't worry about intrest if you....he plans to attack aggressively.

Paying interest is throwing money away, no matter the amount. To throw less money away, start with the higher interest accounts and work your way down.

Charlie

Why don't you have the debt consolidated by one entity therefor giving you one payment at hopefully a better interest rate.

Priority #1 is to cut up all the cards and get the wife on board, if they're going to stay together.

This. Consolidation.

Pretty obvious that you would pay off the highest interest rates first, regardless of balance. Psychological satisfaction of paying off smaller debts with lower interest rates will cost more money in the long term.

He tried this but his Credit Score is below the min to get a Home Equity Loan even though he has almost 200k in Equity.

Modeled some bank loans but the Interest rate is outrageous.

Keep trying. Would you co- sign?

Find a 0 percent interest credit card for 18 months. Do a balance transfer. Pay the balance transfer fee, usually 150 bucks. One time.

You have to start with the highest amount. At this point, interest is a moot point. Knock out the biggest cards, then take whatever money he’s paying towards them monthly, and start paying the next highest, then all that money and pay the next highest. Depending on the rest of his finances, he could have that debt cleared out by this time next year.

This is one of the few things that Dave Ramsey preaches that I agree with. This will also improve his credit score, if he cancels the cards after paying them off.

I doubt he would qualify for that given what we know

I did that once in the early ‘90’s. Hit up a local credit union, they are easier to work with

Declare bankruptcy, repeat process in 7 yrs

Bill, u need to co sign.

Pay off the smallest first, do not use the cards, and do not close the accounts.

This should bring many of the accounts in good standing thus improving your credit report. Get a personal loan for the remainder of the cards once the credit report is sufficient.


Note: You may need to show slight card usage after a few months to keep the account in good standing

The Dave Ramsey approach is to pay off the smallest and work towards the biggest. As he pays off and closes each account, the monthly payment from that account rolls into the monthly payment for the next one. Hence the term debt snowball. Once he gets the snowball rolling, the idea is that the payment keeps building and helps him pay off and close the next account. Interest rates don't usually come into play because he is paying everything off over a short period of time and the difference in a few percentage points over the course of a year or two isn't that big of an issue. Yes, he will pay more in interest this way. However, the key is to pay things off quickly so he doesn't pay that much more.

This is all under the assumption that he is serious about paying everything off and changing the underlying behavior that got him into the mess to begin with. If he doesn't change the bad behavior, all that will happen is that he will spend 17G paying off 5 or 6 cards and then he will run them all right back up. Also, I would be willing to bet that once he closes out 12 of the 15/16 cards, his credit score will go up and that may help with the home equity loan.

First. Stop spending.

Man how do you give sound advice on this?

I think you need a combination of many of the above posts. First, im not going to drive myself into the poor house paying CC bills till I figure out if the marriage was still on and if she was going to quit blowing money.

Then I would start paying off the smallest cards first and contact all the creditors and at least let them know your making a plan and working on it.

How does someone have the income to get a home over $200k, have $200K worth of equity in the house, and not have the income or sense to take care of $30k worth of loans with a $17k head start?

Well articulated.

^^ This except whats in "red", canceling cards in good standing will kill your DTI (Debt to income ratio) and lower your score,

Assuming you can't get another card. Some of the existing cards probably have a zero interest balance transfer feature. Pay one or several of those off first and transfer as much of the highest interest rate cards to those. Pay them off monthly and repeat the process. You will be rolling off the high rate cards to zero interest card(s). Do not close any of them as they pay off. A significant component of your credit score is your available credit. Closing them will ding your score. Tell the wife she has to have sex with you every time she charges something. That'll stop her lavish spending in a hurry.

Math says higher interest to save future interest


Psychologist say lowest balance so you get lower number of lines


Either way a one time payment won’t solve your problem. Budget your money and as Dave Ramsey would say go beans and rice to pay down debt.


It’s possible. Good luck