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Advice Wanted!

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I’ve been doing a lot of thinking about our debt payoff journey and feel as though I’ve come to a bit of a crossroads. Sometimes having an objective opinion (YOURS!) is just what it takes for me to gain a little perspective or see something from another angle, so here’s the deal….

I’ve been (borderline-obsessively) checking and re-checking my budget/debt spreadsheet, trying to determine the best course of action. It appears that we will be able to pay off the Wells Fargo card much sooner than previously expected (probably by June!!!), and the plan has ALWAYS been to snowball that payment toward our last credit card – Bank of America.

But a careful examination of ALL (of our many, many) debts leaves me feeling a bit unsettled about the decision. I think the money may be better allocated toward a different debt.

To get a big picture, I’m going to break from the mold a little and lay out my debts now (mid-month) instead of waiting until the beginning of June. So here’s the big debt picture (listed by APR – highest to lowest). Note the “Deferment Ends” column. I have listed minimum payments for my student loans once deferment ends.

PlaceCurrent BalanceAPRMinimum DueMin Due (When Deferment Ends)Deferment End Date
Wells Fargo CC$334513.65%8787N/A
Sallie Mae - Dept of Ed$55788.5%0692/10/15
Sallie Mae - Federal Student Loans$45648.25%6262Current (no deferment)
Carmax$229947.75%470470N/A
BoA CC$21407.24%3535N/A
ACS Student Loans$213887.24%2524010/28/14
Sallie Mae - Dept of Ed$652367%07372/10/15
License Fees$56232.7%5555N/A
Medical Bills$82530%100100*Still does not include Mayo Clinic bill
Totals$139121

 

My thoughts are totally fragmented, so I’ll lay them out bullet-style.

  • I recently discovered that one of my Sallie Mae Department of Education loans is at an 8.5% APR….ALL of the others are at 7% so I had mistakenly thought this one was 7% too, and had previously lumped them all together. I’ve now separated this debt because it will be my highest interest-rate debt after WF is paid.
  • When deferment ends my plan has been to consolidate my student loans and try to get a lower interest rate. So its possible the 8.5% could be getting a reduction in February.
  • After my Wells Fargo card is paid in full, my plan is to go try to refinance my car loan for a lower APR (currently 7.24%). So its possible I can get this interest rate lowered.
  • People may disagree with this one (particularly as my #1 goal has ALWAYS been to eradicate CC debt), but now I’m feeling less urgency about getting rid of my BoA debt. I feel the money might be better spent going toward a higher interest student loan??? Additionally – any credit gurus out there? I’ve read that if you have $0 CC debt it can actually ding your credit score a little (not as significantly as having too much debt-to-credit, but there’s still an impact). Being as I’m trying to refinance student loans and cars, I’m thinking that leaving a little debt on my lowest APR card right now might not be terrible? (Note: I’m NOT suggesting I stay in debt forever….just saying I may be better served to allocate funds toward higher APR debt currently while I’m playing the credit score game).
  • My ACS student loan deferment ends in October, at which time the payment will increase to $240/month.
  • I’m mathematically-minded so my preference in debt-repayment is highest APR first (regardless of balance).
  • That said, if I were to rank-order my debts in order of the PERSONAL satisfaction I’d receive from paying them off (that whole psychological aspect component), I’d rank: Wells Fargo, Bank of America, Carmax, License, Student loans, medical debt).
  • My current inclination (a rough combination of mathematical and personal satisfaction factors) is to rank order debt repayment as such: Wells Fargo, Sallie Mae (first the 8.5% APR, then the 8.25% APR loan), Bank of America, license, Carmax, remaining student loans (ACS & Sallie Mae 7% APR), and medical debt still dead last.
  • At the same time, I’m trying to think of some strategy to leverage the extra money we have right now. While student loans are still in deferment I have a good amount of extra money to throw toward debts. Once deferment ends my funds will be greatly divided. I’d like to strategize to eradicate some of the lower-amount debts so that – once deferment ends – my funds aren’t being split into 15 different directions!
  • Ever heard of using a 0% APR credit card to pay student loans??? Remember that 0% offer I got that everyone said I should take? I never did (and won’t need it since I’m kicking WF’s butt right now!), but maybe I could use it for the 8.25-8.5% APR student loan debt??? Yay? Nay?
  • Keep in mind we’ve only budgeted $1500/month for debt repayment, though we’ve been putting extra toward debt each month if we have money available after paying our bills.
  • Another couple considerations to throw into the mix just for fun…at some point (before all of our debt is gone), we’re going to have to cash-flow some major expenses: serious dental work for my husband (discussed earlier today), and a new work truck for my husband (if we’re lucky, maybe it will last until next winter….we already had several problems this past winter). Plus all the “baby” related items as our girls grow older – buying the supplies to convert cribs into beds, newer carseats when they outgrow the old ones, etc.

I’ve liked not splitting priorities, so I can focus on eradicating one debt at a time, but I won’t have that luxury much longer, as the minimum amounts due on many of the currently-deferred student loans are going to be increasing within the next 1-8 months and forcing me to split up our finds.

Your thoughts, recommendations, incite?

And….GO!!!

 


Jasmine’s Debt Introduction

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Note: This is the introduction that Jasmine has provided in hopes of becoming the next blogger at BAD. Once reading her post, feel free to comment or ask relevant questions to her situation and this blog. More information about this position can be found here

Hi BAD Community!

jasmine

As a potential future blogger for Blogging Away Debt, I was asked to write an introductory post sharing my debt. While I had wanted to start with who I am and not what I owe, life throws curveballs. So I’ll start with what I owe, and we’ll circle back to who I am if you choose to follow me on my debt payoff journey. To frame my debt journey, I will share these upfront details: I’m Jasmine. I’m a 27 year old business analyst living in Northern VA. I’ve been working at the same job for 4 years and am finally starting to earn enough to be able to aggressively tackle my debt while still having some semblance of a life.

Here’s my debt breakdown:

  • Car Loan: 9982.30 (Just made an extra payment last week to bring it under 10 grand!!)
  • ACS Education Loan: 10689.17
  • Wells Fargo Personal Loan: 2557.39
  • Sallie Mae 1: 2801.86
  • Sallie Mae 2: 4814.66
  • Sallie Mae 3: 2745.82
  • Sallie Mae 4: 2684.73
  • Sallie Mae 5: 4741.73
  • Sallie Mae 6: 2973.94
  • Dept of Ed 1: 6069.72
  • Dept of Ed 3: 2181.81
  • UFMB Personal Loan: 3438.81
  • Total Debt: $55,690.94

Paid off since starting my debt journey:

  • Dept of Ed 2 + Credit Card + Regular Payments = $12108.40

I’ve been reading this blog since Adam and Emily took over. When they shared that they would be leaving, I immediately reached out to Jeff to take the reins. I love the fact that you readers will be tough and hold me accountable. (Trust me…I need it!) I’m in a fortunate living situation (which I’ll elaborate on in another post) that allows me to be able to focus on paying down my debt, and I’d appreciate having all of you along to support me and be that good angel on my shoulder when the spending devil is tempting me 🙂