Reply to What to do first? Debt vs Savings/Retirement

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]What are the interest rates?[/quote]

Interest rates on CC's are 24%.  The CC's mentioned are mine, not DH's.  DH paid off all of his CC's with a consolidation loan that is $300 monthly.

Interest rate on car #1 is 11%.  Car #2's interest rate is 7%.  [/quote]

Listen. You need some tough love here. You are making extremely poor financial choices. Like I said above, ditch the expensive car. You have one child and you do not need anything more than a cheap, reliable sedan.

What about your situation is causing you to consistently live above your means? With $230k, renting, and 1 elementary child you should not be stretched to save in an emergency fund. Where is your money going? [/quote]

+1000  Also, not to pile on, but your DH's card isn't paid off.  He simply transferred the debt from the credit card to a consolidation loan that it sounds like you're still paying on.  Just more debt upon debt.

Listen, it's time to google "Dave Ramsey's debt snowball"  He gives very basic, sound advice about getting rid of debt, just ignore his Christian schtick if that's not your thing.  He would tell you to stop contributing to any retirement or savings until your debt is cleared.  Use any savings you have, but for $1000 (starter emergency fund) to pay down the smallest debt.  Then, sit down, come up with a monthly budget.  Pay minimums on everything except your lowest debt.  Put everything extra toward that debt until it is paid off.  Then do it again with the second lowest debt.  At that point, you'll be putting your extra plus what you were paying on the minimum for that second debt to pay it off.  Then do it again with the third lowest debt.  You then see how the "snowball" builds.  Don't worry about interest rates for now.

I also know he'd tell you to sell the expensive car. But if you can muddle through and pay it off in your debt snowball, that might work just as well at your income level.

Finally, when you're done paying off all debts other than your home, you start an emergency fund.  You put that snowball into savings until you get to 3-6 months of living expenses.  After that's done, you start your retirement contributions back up with the snowball money.[/quote]

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