lurker coming out for some of your great advice!

[Nala]

Hello all! I have been lurkeing here for a while and you all have great advice so I was hoping I could post my deliemma and get some feedback/opinions from you!

We have gotten our tax return back and are going to be using it to pay sown some of our CC debt, But which one...Up until now we have been following DR's advice of paying smallest debt to biggest but I am beginning to waver on that...here is our CC debt breakdown and a question to follow...
CC#1 balance $384 @ 14%, fixed $15 min payment
CC#2 balance 1164 @ 15%, fixed $27 min payment
CC#3 balance 2775 @ 8%, fixed $44 min payment--(we are on a hardship program with this card and come December the interest rate will raise to 25% )

My question is...We have $1600 to put towards our debt. Should I put the entire $1600 on card #3 then snowball onto this card to ensure that it gets paid before our interest raises on it? Or should I just keep doing what I have been doing and pay off #1 and #2 and put a little on #3? what do you think?
TIA

[Cheshire]

Are you paying just the minimums now? If not how much do you pay regularly each month?

[Nala]

Ah! right now we are paying about $100 over the minimums...it varies from month to month but never less than $100 but not more than $300 usually.

ETA my husband works on commission and an hourly rate so our monthly income varies widely....

[Shakti77]

Depends on, if you have your emergency fund ready.

If so, I would put this $1600 on the third and pay it off as soon as I can and cancel it. 25% interest rate is too much for me.

[ArtsyMomma]

Well, it looks like if you pay of CC#1 and CC#2 you will have an extra $42 per month to roll over onto CC#3. If you are paying an extra $100 a month on top of that, your payments would be about $186 and it would take 15 or 16 months to pay off CC#3.

Personally - I would do the above, and try to make some extra payments (You did mention your extra payments range from 100-300 extra). I prefer LESS bills because then I have less to worry about. You have 9 months until the rate changes, by then your balance would be around $1000 (assuming the $186 payments).

[FillingMyQuiver]

Originally Posted by Nala

Ah! right now we are paying about $100 over the minimums...it varies from month to month but never less than $100 but not more than $300 usually.

ETA my husband works on commission and an hourly rate so our monthly income varies widely....

So do you mean that you send each month a minimum of:

$115 to CC1
$127 to CC2
$144 to CC3

If this is what you meant, then I would pay off CC1 and CC2 and then send the combined $242 to CC3 along w/ your regular $144. With a combined minimum of $386 being sent to CC3, it would take you 8 months to pay it off, and that's if you don't send anything above $386/ month, which it sounds like you can do some months.

[Altair]

I would pay a big chunk on the one where the interest will raise, then in the future keep up the snowballing.

[travlr]

Originally Posted by FillingMyQuiver

So do you mean that you send each month a minimum of:

$115 to CC1
$127 to CC2
$144 to CC3

If this is what you meant, then I would pay off CC1 and CC2 and then send the combined $242 to CC3 along w/ your regular $144. With a combined minimum of $386 being sent to CC3, it would take you 8 months to pay it off, and that's if you don't send anything above $386/ month, which it sounds like you can do some months.

If all of FillingMyQuiver's assumptions are correct, I'd do this. I think you'd have a lot of satisfaction in paying off two cards this month and then you can roll those payments towards your last card and be all paid off by the end of the year.

[Nala]

When I said I can pay $100 to $300 per month over the minimum that was total not per card....so I pay CC#1 $15 CC#2 $27 And CC#3 $44 then I take the extra money we have every month $100-300 And throw it towards one card...
Oh and I have an BEF in place at the time.

[akwifeandmomma]

With your $1600, I'd pay off #1, put the rest on #3, pay it off as fast as possible, then snowball onto #2. Maybe not DR's advice, but then you're down to 2 cards with quickness and can pay anything extra toward #3 until it's paid in full, hopefully before December. I'd do minimums on #2 while paying off #3.

[FillingMyQuiver]

If you paid off #1 and out the rest on #3, your balance on #3 would be $1559. If you applied the min payments from both cards plus the $100 extra, you would be making a payment of $159. It would take you 11 months to pay off the rest of #3.

You have 2 solutions to have #3 paid off by December, by my calculations.

1~ Pay off #1 and put the rest to #3. You MUST put the min from #1 AND the min from #3, PLUS an additional $200 each month. This will have the remaining balance of #3 paid off in 7 months.

2~ Put the full return towards #3. This leaves you w/ a balance of $1175. If you put at least $144 towards #3 each month, you will have it paid off in 9 months.

With solution 1, you MUST put at least an additional $200 towards cc3, BUT you won't have cc1, so at the end of 7 months, you will have 2 debts paid off.

With solution 2, while you don't have the stress of NEEDING more than an additional $100, and whatever money above $100 can go towards the balance and drop your payoff even faster, at the end, you'll still have 2 credit cards that have balances.

[jeca]

I would put the chunk on the one with the upcoming interest raise. If it was going to stay at 8% I would say pay off teh smaller two but you don't want the interest on that one to creep up on you if you don't have it paid down enough.

[Contrariety]

Could you pay off the first two, work really hard and snowball the second one and then transfer anything that is left before your interest rate gets hiked up? That's probably what I would do.

[Ellien C]

Pay off #1 and #2. Close card number 2. Continue to make payments on #3, but transfer the balance to #1 before the raise in rates.

[doubledutch]

pay off cards #1 & #2 now. put the $42/month you were paying on those toward card #3 in addition to the $44/month you're currently paying on #3, plus any additional funds (that $100-$300 per month you mentioned, windfalls, etc). if you do that religiously and don't use any of your cards, you would have it nearly paid off by the time the interest rate jumps, and at that point, you can transfer the balance to one of your lower interest cards.