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Snowball Order to take advantage of new CC laws

January 29th, 2010 at 08:52 am

Our DEBT SNOWBALL order is...

Debt Balance APR%
[ ]Chase #1 62 19.24%
[ ]CitiCard 165 19.99%
[ ]BofA #1 238 19.24%
[ ]Chase #2 466 19.24%
[ ]Target 622 25.99%
[ ]Chase #1 945 16.24%
[ ]BofA #2 1,203 19.99%
[ ]Target 1,765 22.99%
[ ]Chase #2 1,876 12.24%
[ ]Chase #1 1,915 3.99%
[ ]Chase #2 2,002 4.99%
[ ]CitiCard 2,172 13.99%
[ ]Overdraft 2,929 18%
[ ]BofA #1 4,642 16.24%
[ ]BofA #2 6,707 7.24%
[ ]BofA #3 7,876 9.90%
[ ]Car Payment 11,883 9.90%
[ ]Student Loan #1 701 2.57%
[ ]Student Loan #2 1,317 1.23%

Ok, I know it's a little different than what's "recommended", but that's because I wanted to see progress right away and it takes advantage of the new credit card laws taking effect Feb. 22nd. Since anything above and beyond our minimum payment must go to the balance with the highest APR, I have broken our various credit card balances by APR since several cards have 2 or 3 APRs attached to the balances. This way we will see debts being paid off quickly, it will lower the minimum balance on each card as we do (free up more money to contribute to the snowball) and it just makes sense to me. I think we need the emotional high of seeing a debt paid off.

The only other thing I did different was put my student loans at the end. Since they are on a payment plan and are not revolving debt, the interest is so low, etc. I just could not see paying those off when I have so many other revolving debts at much higher interest rates to pay. Also, these student loans (and the car) will all be paid off before June 2013 (our estimated pay off date) just on the regular payment plan, so even if we can't put extra to them, they'll be gone.

Our goal is to have our $1,000 starter emergency fund in place by March 15th so we can start paying these down. I will try and post our new budget soon.

5 Responses to “Snowball Order to take advantage of new CC laws”

  1. Ima saver Says:

    I don't mean to sound rude, but why do you have so many credit cards?

  2. Personal Finance Student Says:

    Ima - That's not rude. We have 7 credit cards and one line of overdraft listed above, I have just broken each of the credit cards down into the different APRs that each balance is being charged. We each had two credit cards when we got married and we now have 7 cards between the two of us. I listed it out like I did, so I have smaller goals to attack (and achieve!) at first and all of the really high APRs are paid off first (this should be easily done after Feb. 22 when the new CC law goes into affect).

  3. homebody Says:

    You have to go with a plan that feels right for you... and really Dave Ramsey says to do it the way your are so so you are feeling progress. Good for you though with coming up with a plan!

  4. A Concerned Lurker Says:

    I think it is a great plan, and you have a good point about the changes in the credit card laws where payments will be applied to the highest APR balance first, I hadn't thought of that myself as I pay down my credit cards. Makes sense to hit the cards with smaller balances that have higher APR's.

    I know you said you and your husband are on the same page with this plan, which is good.

    However, has he promised that there will be no more "surprise" personal debts to pay off from now on? If not, any plan you try and follow will become quite difficult.

  5. Personal Finance Student Says:

    Concerned Lurker - I understand what you're saying and agree. He has promised that there is not any newly incurred debt (and there hasn't been any new debt incurred for quite some time), but we both feel like we must pay old debts as they are remembered. We think this is the only honest thing to do. I just pray that they are done soon. My rough estimate of being done by June 2013 is with leaving about $150-200 a month as a "cushion". Hopefully, it won't be used for his debts and quite frankly that's much less than we've been spending a month to service his debts, so if the plan is to work his debts do need to slow down a lot or stop, but I am going to be optimistic since that's really my only option right now. Any of that "cushion" we have at the end of the month will be rolled into extra debt payments.

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