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Thread: Paying Off Big Debt - April 2018

  1. #11
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    Wow, thanks, Everybody, for your support. It means a lot.

    I should say the debt I'm tackling is credit card debt. I also have a mortgage and am in my last year of a five-year car loan. I don't worry about those loans too much, just make the payments on time. But I HATE paying credit card interest!

    I will keep checking in to let you know how it's going!

  2. #12
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    Credit card debt is definitely one of the worst.

    it sounds like it’s going really well so far though!

  3. #13
    Senior Member catherine's Avatar
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    Quote Originally Posted by ejchase View Post
    But I HATE paying credit card interest!
    I use YouNeedABudget to track expenses and it automatically imports from my CC statements, which means I have to make a category for Debt Service (Interest), and it kills me to see it in black and white in my budget. I think of all the stuff I could buy or save with the money that just drops into the abyss of high interest. But it's motivating.
    "Do any human beings ever realize life while they live it--every, every minute?" Emily Webb, Our Town
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  4. #14
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    Larry Burkett was a Christian Financial author/radio personality that advocated a thing he called the debt snowball method. His method was to pay the minimum on everything except the smallest debt. Pay all the extra to the smallest debt till it's paid off, then do the same thing with the next smallest one. When we had more than one credit card this seemed to work for us. He had plenty of other things in his books, but this is the one that I remember.
    Last edited by Baldilocks; 4-1-18 at 9:55am. Reason: wrong word, missing capital

  5. #15
    Senior Member catherine's Avatar
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    Quote Originally Posted by Baldilocks View Post
    Larry Burkett was a Christian Financial author/radio personality that advocated a thing he called the debt snowball method. His method was to pay the minimum on everything except the smallest debt. Pay all the extra to the smallest debt till it's paid off, then do the same thing with the next smallest one. When we had more than one credit card this seemed to work for us. He had plenty of other things in his books, but this is the one that I remember.
    Larry Burkett was a mentor to, or he at least heavily inspired Dave Ramsey, who also built his debt elimination "baby steps" on the debt snowball method. He often mentions Burkett in his podcasts.

    ej: BTW, I LOVE listening to the DR podcasts. I know a lot of people get turned off by the evangelical Christian slant, but if you can overlook that, I just love the no-nonsense/common sense way he talks to people about their finances.
    "Do any human beings ever realize life while they live it--every, every minute?" Emily Webb, Our Town
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  6. #16
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    I’ve never really understood that method. I know it relies on the mental “boost” of having fewer debts, but progress actually “snowballs” faster if you pay your minimums and then throw everything you have left at the debt with the highest interest rate.

    in fact, increasing your number of debts by moving some to zero interest cards like ejchase did actually improves your situation. (But watch out that they don’t suddenly become your new, highest interest problem by not being paid off in time)

    if the home home equity loan was mine alone, I would not make extra payments on it at all until I had paid off my car, but the $500 a month while I am working is the contribution dh and I agreed on. (Also, the standard payment on the h.e. loan is more than $500, so if it was mine alone, I would be paying off the car more slowly.)

  7. #17
    Senior Member SteveinMN's Avatar
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    Quote Originally Posted by Chicken lady View Post
    I’ve never really understood that method. I know it relies on the mental “boost” of having fewer debts.
    That’s exactly it. It's kind of like the 1800-calorie diet you can stick with and the 1200-calorie diet you can't. You'll lose more weight on the 1200-calorie diet, but not if you can't follow it. You get the satisfaction of totally knocking a card off your list without too much work, which makes it easier to take on the next one. Nothing like a little success to beget more of it...
    Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome. - Booker T. Washington

  8. #18
    Senior Member rosarugosa's Avatar
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    Quote Originally Posted by SteveinMN View Post
    That’s exactly it. It's kind of like the 1800-calorie diet you can stick with and the 1200-calorie diet you can't. You'll lose more weight on the 1200-calorie diet, but not if you can't follow it. You get the satisfaction of totally knocking a card off your list without too much work, which makes it easier to take on the next one. Nothing like a little success to beget more of it...
    Steve, that is a fantastic analogy! I also like what JD Roth says about it being more a matter of mind than of math. If it was all about math, a lot fewer people would have debt.

  9. #19
    Senior Member catherine's Avatar
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    CL, I know that sounds reasonable, but people who feel overwhelmed by debt are more MOTIVATED by early, frequent successes. So say your highest interest rate debt is a $10,000 CC bill @ 17%, but you also have a $1,000 medical bill at 0 interest you're paying off and a $2,000 CC @ 12%.

    It seems more financially sound to pay off the $10,000 first, but it is VERY overwhelming to start with such a high debt ($10,000). You feel you're getting nowhere and you give up. But if you can cross off a few low balance debts, it encourages you on with small successes. I think that applies to a lot. If you are trying to lose weight and you see you've lost 3 lbs in a month in it encourages you to go further. If you stepped on the scale but you knew you wouldn't see anything until you'd lost 40 lbs, you'd give up.
    "Do any human beings ever realize life while they live it--every, every minute?" Emily Webb, Our Town
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  10. #20
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    I’d throw out the scale.

    i think it’s more to do with how your brain works - I understand what is happening in the brains of people for whom that works, but mathematically, it is not logical, so for me it would just feel stupid.

    i currently put everything I can on the credit card and pay it off every month to maximize my cash back.

    if I had a balance on it, i would set aside what I needed for bills I couldn’t put on the credit card every month, on payday, and then immediately put the rest of my paycheck to paying down the card. I would then need to use the card to buy things like gas and groceries, but i would be highly motivated to minimize that, and I would be paying the least interest possible.

    to me, the reduced amount owed on the statement every month is perfectly good evidence of progress.

    but, it would take a big emergency for me to carry a balance, so psychologically, I am unlikely to be the target audience.

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