[Alisha]

Question and a little back ground. I have been struggling severely with my physical health for the last several years which led to a lot of personal problems for me.

At the age of 33 I was told there was no hope for me medically by my primary doctor which I didn’t buy into that mindset and I let her know that and every year I’m doing better and better.

Struggling with your physical health and being single though is an unending battle that many times seems like it’s impossible to overcome.

However, after 5 years of fighting as hard as I could every day I went from making 11 an hour to making 37 an hour just in a 5 year span.

I however have around 14,000 dollars of debt (a lot of which is medical) not including what I owe others who helped me along the way, my car loan, and my student loan.

My credit score is around 550 when it used to be in the 700s. If I can do 3 things I can get my monthly bills down to between 1,400-1,500 a month. These are pay off a small loan that is around 2,000, pay off my debt against the store Aaron’s that is 1,000 something and pay biyearly for my car insurance.

If you were me after catching up on bills and paying off your debt against your credit score would you do those 3 things first to decrease your monthly bills or would you pay off all of your debt first?

I just got the raise and started seeing the fruit of that labor yesterday so it’s not like I’ve made that much for very long in fact prior to 6 months ago I never made more than 16 an hour for a full time job.

So having money to get ahead is new to me.

[Mary]

I am reading so.much about paying first the smallest debts.
yet infact you are still paying high interest rates on the big debts.

I prefer to cut off all the debts with high interest rates so Ithe money I am saving on interest can ve added to paying off the other debts I have.

I do agree with yhe emergency saving

[Brenda]

First establish an emergency fund. If you don’t have that, then you’ll go further into debt when something comes up. I did $1000 when I started my debt payoff.

The next thing is to use a written budget every month. List all income, debts and living expenses. Put any extra money towards the smallest debt.

As soon as that’s paid off, add that payment to the next smallest. That will create the snowball effect.

It also allows you to see debt being paid off quickly and helps with the mental aspect of managing your money.

With your earnings and the amount of debt you have you should be debt free fairly quickly, possibly within a year.

Then you can put a nice chunk into savings/retirement every month

[Kiersten]

First off, I’d probably try and get a month ahead. As in save up an entire months expenses as my basic emergency fund. Again, that’s after I’m caught up on all bills.

Then, I’d have a printed list of my debts listed smallest payoff amount to largest payoff amount.

And I’d start cutting back and throwing all I possibly can at the smallest debt and then throw that payment plus all extra I could find at my next debt.

It might not allow as much flexibility within the budget, but the emotional “win” of crossing through debts with a red pen and knowing I have one less monkey on my back is what helps me best focus on my main goals (to become debt free and have a nest egg and some flexibility with the budget).

Have you gotten all of your debts listed? Have you done the math (there are lots of calculators) to see how long it’ll take to become debt free whether you pay lowest interest to highest interest, lowest payoff to highest payoff, highest minimum payment to lowest minimum payment?

Which one of those options would make you feel most comfortable and give you the most encouragement to keep working hard toward your goals?

[Mary]

pay off the highest debt with interest rates then if you can pay off the individuals who helped you because they may be struggling. you did great in never giving up.

[Traci]

If it were me, I would get my current Financials in order then look at snowballing the debt then lastly look at anything in collections.

[Candice]

Congrats on the raise- that’s quite an achievement in just 5 years. Keep the dialogue going with those around you and you’ll find a path that works for you.

Sorry, I don’t have anything specific in terms of recommendations, but saving 3 months for emergency fund does seem most important.

[Barbara]

Pay your vehicle insurance twice a year. It is a big savings over monthly. That will free up the funds to make more payments on the other debt.

Call each of your creditors to see if you can negotiate the amount down and how much it would be to do so if you make a lump sum.

Then pay the ones you have negotiated down first and in full.

Take all your credit cards out of your easy access and leave them alone….

if they are already paid off only use one for all your credit needs and put that card on full payment each month.

Pay the rest of your cards as much as you can each month and do not use them.

[Author]

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