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Debt Discussions about debt and how to deal with debt.

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  #1  
Old 04-19-2007, 10:36 AM
Mark A Mark A is offline
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Location: Wisconsin USA
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Default Debt Challenge!

My wife and I got married out of college, and we have some crazy debt.

~45000 in student loans
~11000 for her car
~-3000 in an unsecured loan
so, 59000 in total debt.

separating the student loans out, about $10,000 are mine.

She didn't keep very good records and hates money so I don't know what the rate is on the car loan, all I know is that there are 55 payments left.

Anyone have a good strategy to eliminate this debt? We've got a budget and we're sticking to it, and we're both working full-time. We may also need a second car in the near future, which will be an added expense.

Currently my strategy is this:
1. Pay off the unsecured loan ASAP. These payments then become part of the "car payment"
2a. Set aside a "car payment" in a different account so that I can have a down payment for less overall debt on the second car.
2b. Buy the second car.
3. Find out if we can make larger payments on her car w/out penalty, if so, do that.
4. If not, make extra payments on the new car.
5. Since wife is looking at going back to school, make only minimum payments on her loans since they'll go back into deferrment.
6. Once a car is paid off that payment goes towards my loans.
7. That payment goes towards my wife's loans once mine are paid off.
8. That payment will then go into a savings account until we have roughly 3 months income.
9. Then we get to invest.

Please pick my strategy apart, the sooner I'm out of debt the happier we'll be. Also, if you know any good ways we could make some extra money that would be helpful too.
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  #2  
Old 04-20-2007, 09:48 PM
lyricb lyricb is offline
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Default Re: Debt Challenge!

How about getting rid of that car? I would sell it and then just buy a cheap beat-up car to get you around until you get your finances under control.
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  #3  
Old 04-21-2007, 02:28 PM
brian brian is offline
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Default Re: Debt Challenge!

It sounds like you've got a good eye for keeping everything under control, and you appear to have a strategy of snowballing your debts - clearing the lowest first to make room for repayments on larger amounts.

However, one thing I'd take into consideration is which debt has the highest interest rate - for example, if the car loan, and you can pay it off faster, then you'd be saving more money in the long term.

2c.
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  #4  
Old 04-22-2007, 02:24 PM
4silverstrea 4silverstrea is offline
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Join Date: Oct 2006
Location: Canada
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Default Re: Debt Challenge!

Quote:
Originally Posted by brian View Post
It sounds like you've got a good eye for keeping everything under control, and you appear to have a strategy of snowballing your debts - clearing the lowest first to make room for repayments on larger amounts.

However, one thing I'd take into consideration is which debt has the highest interest rate - for example, if the car loan, and you can pay it off faster, then you'd be saving more money in the long term.

2c.
I totallyi agree with you Brian..to pay off the debt with the highest interest rate. I still canít believe that people get penallized for NOT getting into debt.
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  #5  
Old 04-24-2007, 12:55 AM
Mark A Mark A is offline
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Location: Wisconsin USA
Posts: 270
Default Re: Debt Challenge!

UPDATE
DEBT DECREASE

8978.33 car loan 7.99 rate
3075.20 Unsecured loan 8.9 rate
17420.06 Wife's student loans
10045 My student loans
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  #6  
Old 04-26-2007, 09:01 AM
brian brian is offline
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Default Re: Debt Challenge!

So...pay off your unsecured loan, then wipe out the car debt?
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  #7  
Old 04-26-2007, 10:17 AM
Mark A Mark A is offline
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Default Re: Debt Challenge!

that's the general strategy we're going with
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  #8  
Old 05-09-2007, 10:22 AM
Mark A Mark A is offline
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Default Re: Debt Challenge!

any clue how we may be able to supplement our income to pay this off faster? Not looking to get rich quick, but an extra $20-$50 a month would work wonders for us.
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  #9  
Old 05-09-2007, 03:14 PM
brian brian is offline
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Default Re: Debt Challenge!

Mark, what skills do you have? Aactually, PM me instead - shouldn't be hard to find something simple and easy you can do that wouldn't take a lot of time but still get you some cash. Just regular work, no schemes.
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  #10  
Old 05-10-2007, 12:40 AM
jackb jackb is offline
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Location: NC, USA
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Default Re: Debt Challenge!

Tried selling stuff on eBay? You could go visit garage sales & pick up some stuff cheap & sell on eBay. Nothing too intensive, but it will get you the extra $20-50 a month pretty easily.

How much time do you have per week? There are other things you could do, but they take a bit more time..

Its an idea to also pay just a little bit more than the minimum payment on your loans - if you can afford an extra $10 per month, at least this is decreasing your principle & not just your interest.
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  #11  
Old 05-10-2007, 10:04 AM
Mark A Mark A is offline
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Default Re: Debt Challenge!

I'm paying about an extra 150 a month on one of my loans because it's closest to being paid off, then I plan to take all of that and apply it to the next one and so on.
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  #12  
Old 05-16-2007, 11:44 AM
PiscesGirl PiscesGirl is offline
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Join Date: Apr 2007
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Default Re: Debt Challenge!

Pay off all unsecured debt first starting with the higher interest rates. However, if you are close to paying a loan off completely, then yes, do that so you can have the cash flow applied to other loans, just like you said. Start focusing on making income rather than how much debt or you will attract more debt. Check out "The Secret" dvd and you will understand what I mean. Good Luck.
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  #13  
Old 05-21-2007, 02:07 PM
Mynion Mynion is offline
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Join Date: May 2007
Location: Central Ohio, USA
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Default Re: Debt Challenge!

The concensus seems to be the same. Pay off the higher interest debt first, and then work your way down. Increasing your income will increase the amount of money you can pay down in principal, which will help you pay it off faster.

Sell some stuff on Ebay, or get a part-time job delivering pizzas or something until you get the debt paid off. Whatever you do, you know it's only temporary so who cares what it is. Spring/summer is a good time for outdoor jobs and contracting jobs, if you have the skills.

Finally, do not reinvest interest or dividends from any investments that you have. Instead, have it paid out to you and use that to pay down your debt. Since you are paying taxes on it either way, my as well have it work the hardest for you.
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  #14  
Old 06-06-2007, 05:12 PM
Mark A Mark A is offline
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Default Re: Debt Challenge!

June is here, and here's where we stand:
UPDATE
DEBT DECREASE

8700 car loan 7.99 rate
2644.38 Unsecured loan 8.9 rate
17300.06 Wife's student loans
10045 My student loans

so... $38,689.44 in debt.

The good news is that we've been disciplined enough to not use the credit cards at all, so if we needed to for extreme emergencies we could rack up another $10,000 or so in credit card debt. We won't need to though because our emergency fund is almost high enough that we can convert it to a money market account (right now it's just a savings account) and then that money can be working for us in a liquid state, where we can draw from it if we need to, but earn 3.5-5% interest on it if we don't.

Also, we have a CD coming to maturity in September which we will dump on top of that unsecured loan, which will help us have it completely paid off by then. This will free up another $330 towards the car every month.
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