Help me spend my car payment!

[Anonymous]

Here's a good post about snowballing to get you started OP:

https://www.daveramsey.com/blog/get-out-of-debt-with-the-debt-snowball-plan

[Anonymous]

Here's a good post about snowballing to get you started OP:

https://www.daveramsey.com/blog/get-out-of-debt-with-the-debt-snowball-plan

[Anonymous]

Here's a good post about snowballing to get you started OP:

https://www.daveramsey.com/blog/get-out-of-debt-with-the-debt-snowball-plan

[Anonymous]

Anonymous wrote:

Anonymous wrote:OK DCUM sages. I'm about 3 pay periods away from being in the prime position to having a paid off car. I genuinely want to plow that payment of $350 every pay period into a bill, and continue not seeing that money in my checking account, i.e. it gets automatically withdrawn like my car payment does.

Chase ~ $9,400 @ 15% (this one is at its limit, so killing my credit score, I may want to bring this down 1 or 2K)
Amex ~ $4,500 @ 21%
USAA ~ $5,200 @ 16% (this was a roll over deal, so that card is literally not even activated).
Line of Credit ~ $5,000 @11% (basically overdraft protection, but maxes out at $5,000).

I'm really hoping to concentrate on the above. We're good on retirement, ok on college savings. Until July, we'll have 2 in daycare, so once the middle one heads to K this fall, we're pausing college savings. We do have some set aside for the 9 year old.

NOW, one wild card, that I originally thought about doing. I drive an '04 Volvo SUV, with almost 166K miles, but very low mileage, I only put around 25-50 miles per week. Part of me wanted to plow that $350 twice monthly into an account for a downpayment to replace that when it dies, as I REALLY don't want to shell out much for a down payment, nor have a payment.

Thinking about paying the bills until end of this year, then create the account after the new year for a car.

Thoughts? Please try not to judge the spending. It's not all me or junk.

That is dumb. Not ever having a car payment again is a great idea in theory, but not if you're prioritizing avoiding a potential 3% interest future debt by saving for a downpayment and hanging onto 21% interest current debts to do so. You have $25k in high interest debt, that's where you need to put your money. Start with the Amex.

This is spot on. It's an easy decision in that your highest interest rate also is your lowest balance. Start with the Amex. Also, if you have maxed out $5000 in overdraft protection, you need to sit down and make serious, foundational changes. Vacations, for example, need to be put on hold, as does ALL college saving.

[Anonymous]

Holy moly those interest rates are high. Pause all non-essential spending and put all excess toward those cards after the car is paid off. No eating out, no new clothes, etc.

Don't worry about building up college savings or regular savings, just work on shoveling thousands of dollars a month until that unsecured debt is paid off. Then, worry about the rest. That much unsecured debt is a sign of uncontrolled spending outside your means.

[Anonymous]

Anonymous wrote:Holy moly those interest rates are high. Pause all non-essential spending and put all excess toward those cards after the car is paid off. No eating out, no new clothes, etc.

Don't worry about building up college savings or regular savings, just work on shoveling thousands of dollars a month until that unsecured debt is paid off. Then, worry about the rest. That much unsecured debt is a sign of uncontrolled spending outside your means.

Yes, this.

[Anonymous]

Anonymous wrote:Also, in the future don't buy a car with a $350/mo payment when you are $25k in the hole.

It's not. It was $240, but when I got an additional $100 with the tax cut, I plowed that into my car payment. In fact, the original payment was just $235, but I've ratcheted it up a tad.

[Anonymous]

Anonymous wrote:OP how much is daycare for the 5yo per month?

I'm paying $1483 for the middle one, $900 for the younger. So nearly $2,400 when you factor in diapers for the little one.

In the fall, she'll be going to a center more in line with the higher payment, but we'll be dropping one payment obviously. So I'm looking forward to looking at just about $1,500.

Yes, I'm aware that the ones in school will need some sort of afterschool care.

[Anonymous]

Pay off the AMEX, then split the baby. $200-250 into savings each month and the rest, plus what you were paying on AMEX previously, to USAA and then so on by interest rate.

With a car that old you need a repair fund before a down payment fund, or you'll end up with more on credit cards when something breaks. Aim for $$1500-$2000 in that fund and once you hit that, throw everything again at the debt until it's gone.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Also, in the future don't buy a car with a $350/mo payment when you are $25k in the hole.

It's not. It was $240, but when I got an additional $100 with the tax cut, I plowed that into my car payment. In fact, the original payment was just $235, but I've ratcheted it up a tad.

There's no way the car payment had equivalent interest rates to the credit cards. If that's how you think, I agree with everyone recommending snowballing.
As for college, put your oxygen mask on first, then get to the kids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Also, in the future don't buy a car with a $350/mo payment when you are $25k in the hole.

It's not. It was $240, but when I got an additional $100 with the tax cut, I plowed that into my car payment. In fact, the original payment was just $235, but I've ratcheted it up a tad.

There's no way the car payment had equivalent interest rates to the credit cards. If that's how you think, I agree with everyone recommending snowballing.
As for college, put your oxygen mask on first, then get to the kids.

I'm not, you're fixating on something that's really not relevant. The question at hand is how you would you spend an additional $700/month.

[Anonymous]

I agree that you start with the Amex first, but PLEASE have some sort of emergency fund. $1000 of a fund will be cheaper than putting anything on credit.

What are your minimum payments for each of your cards/LOC and how much are you paying toward them each month? You can write a spreadsheet that will show you how quickly you can pay everything down. Once you pay off the Amex, you have $350 + Amex to throw at the next card. It is very satisfying. (I did this with grad school loans.)

In the meantime, cut out all of the fat from your budget. Restaurants and new clothes are off the table. Pack lunch for work! Go two weeks longer between hair cuts. Alcohol on weekends only. Use the library.

You can knock this out quickly if you are disciplined and your beater car cooperates, but it can also blow up on you if you are not careful.

[Anonymous]

Ok, I'm playing with numbers while I eat my lunch.

Your extra $700/mo ALONE could pay off that Amex debt in just over 7 months. Add in whatever you're paying already and you knock it out even faster.

Give us your min/actual payments. I'll check back in later and can calculate how long it will take you to pay everything off. I always found that very motivating!

[Anonymous]

OP - are you paying 350 a pay period or a month (or are this the same for you)? If you are able to throw $700 more a month at the debt that will go a long way.

If you are brave enough, DCUM can be harsh, put down your income and expenses and see how DCUM can help. Also, do you use expense tracking software. We just use the HomeBudget app but it has been great at getting a handle on spending to stay more on budget.

Also, I suggest us g the IRS calculator to make sure your pay adjustment to the new taxes is accurate. You may b entitled to more or less than the $100/ paycheck increase in take home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP how much is daycare for the 5yo per month?

I'm paying $1483 for the middle one, $900 for the younger. So nearly $2,400 when you factor in diapers for the little one.

In the fall, she'll be going to a center more in line with the higher payment, but we'll be dropping one payment obviously. So I'm looking forward to looking at just about $1,500.

Yes, I'm aware that the ones in school will need some sort of afterschool care.

This will be great for you, though. Aftercare usually ranges between 390-450 a month. Giving you another $450 to add on to the pile to pay this off.

I'm sorry you're getting a bit beat up, but you know...DCUM. I will tell you that I was in a spot like yours a while back (actually in 2001) and haven't been in debt since I paid it off. Once you get started and stay motivated it gets easier and easier as you see the balances go down.

I'm with the other PP, if you are brave, post all incoming/outgoing and you'll probably get a solid plan out of it.