Aries
08-21-2016, 04:14 AM
We keep getting snippets of your financial situation, but without the entire story, we might not be giving the best advice we can. If you want, you can take this offline with me or another trusted person and maybe get you a simple plan together to get you debt free in a reasonable amount of time. It's a lot easier to get into debt than it is to get out of debt!
Keeping the existing car for now makes good sense to me. I think you made the right decision there.
The suggestion to use a snowball strategy has its merits. You are numerate, but need to develop healthy financial habits.
The two strategies are snowball and highest interest rate first.
Snowball: write down all your debts in order of smallest to largest. Pay off your smallest debts first while paying the minimums on all others, so you have quick milestones that you achieve by completely eliminating certain debts. Then you use the money to attack the next smallest debt and eliminate it next, while still paying the minimums on all others. You do this until you are down to the last, largest debt.
Highest interest rate first: Write down your debts with highest interest rates first down to lowest interest rate last. Pay the maximum you can each month on the highest interest rate debt while paying the minimum on the lower interest rate debts. Then once you eliminate the one with with highest rate, you attack the debt with the next highest interest rate.
The first strategy builds discipline with fast feedback. The second strategy costs less to eliminate the debts, but it might take you longer to eliminate the higher priority debts, so psychologically might be the less desirable strategy for you.
Since you are numerate and computer literate, I recommend you put it together in an excel spreadsheet. You should be able to make a graph every month or so that shows you your declining debt balances. You can make a graph that shows a larger and larger precentage of your payments going toward principal and less and less percentage going to interest. These kinds of visuals may be useful to keep you on track.
Keeping the existing car for now makes good sense to me. I think you made the right decision there.
The suggestion to use a snowball strategy has its merits. You are numerate, but need to develop healthy financial habits.
The two strategies are snowball and highest interest rate first.
Snowball: write down all your debts in order of smallest to largest. Pay off your smallest debts first while paying the minimums on all others, so you have quick milestones that you achieve by completely eliminating certain debts. Then you use the money to attack the next smallest debt and eliminate it next, while still paying the minimums on all others. You do this until you are down to the last, largest debt.
Highest interest rate first: Write down your debts with highest interest rates first down to lowest interest rate last. Pay the maximum you can each month on the highest interest rate debt while paying the minimum on the lower interest rate debts. Then once you eliminate the one with with highest rate, you attack the debt with the next highest interest rate.
The first strategy builds discipline with fast feedback. The second strategy costs less to eliminate the debts, but it might take you longer to eliminate the higher priority debts, so psychologically might be the less desirable strategy for you.
Since you are numerate and computer literate, I recommend you put it together in an excel spreadsheet. You should be able to make a graph every month or so that shows you your declining debt balances. You can make a graph that shows a larger and larger precentage of your payments going toward principal and less and less percentage going to interest. These kinds of visuals may be useful to keep you on track.
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