Situation:
I came into some cash and looking to figure how to best apply it to some existing personal debt this year. Carrying about 28K in debt across some credit cards and loans. Here's the break down:
- Credit Cards
- $4500 @ 27%
- $4200 @ 25%
- $2500 @ 18%
- Loans
- $8500 @ 16%
- $8200 @ 14%
I want to apply about 11K to make a sizable dent in this debt. Thinking to start with the highest APR credit cards, pay those 3 cards off in full. After that take the money I would have spent on monthly credit card payments, combine it and apply monthly it to the $8500 loan until it's paid off. Then repeat for the last $8200 loan.
Is that the best way to approach knocking down this debt? Alternatively would you do anything else with the cash to grow it instead of applying it to debt right away?
Personal Debt Strategy Advice
byu/X600CX430R inpersonalfinance
Posted by X600CX430R
2 Comments
All of your debt is 14% or higher. No way your cash is going to grow that much. Definitely tackle the debt as you laid out. How much cash did you come into? Definitely start with the higher rate first.
Eeesh that’s a bummer of a situation to begin with. Glad you got a good chunk of money to tackle some of that debt though! I think the plan you just laid out is the best course of action. No notes. Good luck, friend! 👍