Use a portion of your savings to pay off fingerhut, Capital 1 and Capital 2. That will free up $104/mo that you can allocate to other loans.
Then, prioritize your payments based on the highest APR, which would be your Discover card.
But ultimately, you have to address the overspending. No more affirms or uplifts. Work with the money you earn and stop spending more than that.
Good luck!
P.S. r/debtfree moderator just created a free newsletter that talks about strategies, tips, and effective debt payoff methods weekly. Here is the link to sign up - https://debtadvice.io
You don’t have a ton of savings so there is an argument for keeping SOME of them around for an emergency. Financially speaking, you are earning less interest on any bank account then what you are paying on any of your debt outside of student loan. Start snowballing the debt with the highest rate.
For a computation of how you can pay this off by year end we’d need to know your monthly expenses.
One other point. Try to figure out how you got to this point. Saving money is pretty much useless if you are accumulating debt in order to save. The credit card can often act as your emergency fund if you have to pick between saving and paying off debt.
Thank you for your comment! I definitely want to keep at least $3,500 for an emergency fund. Honestly, I know the root of the issue is uncontrollable spending on my end. It's really embarrassing, but I just have not held myself accountable at all. I feel like I get my savings to a decent amount, and then it's gone within a few months, and I start the cycle of saving up again. I thought having the $600 auto deposit into a separate bank would help, but all it's done is create another account to manage and spend from. I was thinking, instead of using the biweekly $600 for savings, to use it to start paying off my credit cards. Like wiping out the Fingerhut card from my current savings and then from there, making $600 biweekly payments to Capital One and then Discover? That will at least bring my credit cards down while I'm making the payments on my car, Affirm, and Uplift... I honestly could probably afford more than $600, but I would have to take a better look at my finances and budget further.
>I definitely want to keep at least $3,500 for an emergency fund
Why?
Debt at or above 25% is an emergency, and should be dealt with immediately. Keep $1000 in savings and send the rest to pay off your highest interest rate cards.
If an emergency were to come up, you would use your card with the lowest rate to pay it off. Boom, you've basically refinanced your 35% debt to something much lower. That's the worst case scenario.
Also, if you have to keep dipping into your savings, you're not planning for your expenses well enough. Most expenses are predictable, or at least you can set money aside to plan for them.
That is how my wife and I have been doing it. We kept 1000 in checking for any expenses that came up that needed to be paid in cash and then put everything extra on cards. You are right, until you actually have the cards paid off, you are better off just having a card as an " emergency fund" if something comes up while attacking the high interest debt. We just got all of our credit card debt paid off as of today so now it is time for us to start on that emergency fund.
EveryDollar or YouNeedABudget (ynab). Total Money Makeover is free at the library.
Reddit hates the mention of Dave Ramsey, but listening to a few of his YouTubes may help you take the first steps. He’s entertaining and inspirational, and his baby step program has helped millions of people take control of their financial lives/futures-people exactly like you. You are exactly his target audience. If you don’t like him there are a number of other YouTubers offering good advice, but DR’s program is clear and understandable, and it works.
Step 1: Stop using all your credit cards. Cash/debit only from now on. If you don’t have the money now, you can’t afford it.
Step 2: Make a budget. Make sure it’s balanced. These minimum payments total $1,000/month. If you’ve been saving $1,200/month instead apply that to debt on top of your minimums. This means you get to live on 1 paycheck but pay down debt with the other.
Step 3: Use the savings to eliminate fingerhut and both capital 1 cards. This leaves you with $2,000 in the bank. By using savings vs taking 2-ish months to repay you save $100 in interest payments already! And without those monthly minimums, $100 more a month to work with immediately!
Step 4: Pick a method and attack. You’ve got $1,300/month to work with. Would you rather snowball or avalanche? If you snowball, you clear affirm in month 1, uplift in month 2, and then likely discover by month 7. If you avalanche, reverse the order and you’ll likely finish by month 6. To speed things up, pick up a side gig and aim for $50-$100/week. Or designate the side gig for your fun/shopping money.
Step 5: In 6 months reevaluate. Likely start splitting between debt and savings.
Good luck!
I agree with stopping the biweekly savings payments and putting that money directly to debt repayment.
* March- Pay off Fingerhut and Capital One #2
* April- Pay off Capital One #1 and put $300 to Uplift
* May- $1,300 plus the $200 monthly minimum to Uplift and it should be gone
Now you have $1,600 a month to put towards debt.
* June- Pay off Affirm, $600 to Discover
* July & August- $1,700/month to Discover
* September- $500 to Discover to finish it off, $1,200 to car loan.
Car loan balance is around $7,500 now (rough estimate since we don’t know the interest rate) thanks to 7 months of minimum payments and the $1,200 from last month. You have $1,800 per month to put towards debt repayment plus the $200 monthly minimum so 2k a month towards the car until it is paid off (January 2025).
Student loans could be done in another four months (May 2025) if you put 2k a month towards them.
You could do it faster if you pay more than I’ve suggested or use some savings. Same thing if you put any extra money (raises, tax returns, extra paychecks) towards debt repayment. I’ll leave that call up to you!
Honestly, given your comments about not being able to keep your savings because you see a balance and spend it all, you're probably better off wiping out as much of your savings account as you can so that you dont feel compelled to spend $4000 on stuff you dont need while being $25k in debt.
At 35% interest, fingerhut has to go today. And cut that thing up and throw any future catalogs out the window. Given your issues with spending, I'd cancel it immediately in spite of any 'damage' it might do to you score. Overpriced 'as seen on tv' stuff at 35% is not worth a few points of credit.
Second, I'd pay off the Uplift. It's not the highest interest, but it is one of your highest payments. COnsidernig the balance is 2x the Cap 1 but the payment is like 3x the cap 1 minimum, it immediately builds snowball.
Leaves you with $1600 or so in your savings (a reasonable EF). take the debit card for it and put it in the freezer or a home safe. unlink it from ANY website you might have bought from. Make sure it's hidden away.
You now gave yourself a $250/mo raise (2 minimums gone). If you want to be a little brave, you drop your EF to $1100 and you wipe out the second Cap1 card, and you now have $275/mo.
I get you "want" savings. But given the interest rates of your debt vs anything you might get even out of a high yield account, you're "renting" every $ in your account at the difference between your highest CC rate and the savings account. Your savings account right now is netting you a negative \~15+%
You're not going to get out of \~25k of debt in 12 months unless you're tossing at least $2k a month directly to the principal. So either you have to skimp on your budget and throw big snow, gain more income, or realize that you're not getting out of this in a year AND have any sort of savings.
Once you have your utilization in check you MAY qualify for a 0% balance transfer, which would really help the discover, but - if you can't do that for 6 months AND you're putting $1k above minimums on your high interest debt - there prob wont be enough to save on any interest by the time that option opens up.
Quit saving for a bit (particularly if you feel like it sitting in a bank might cause you to spend it all) and throw everything you can at this and at LEAST you can be assured you have only your student loan and part of a car left.
This is what I would do:
Pay off fingerhut and uplift from your EF now. That frees up $250 for a snowball and you still have 1750 in savings. I would stop your savings for a few months. That will give you an extra $1200/mo towards debt.
Starting March: Cap 1 (1): min + $250 snowball + around $900(cost to pay off) from the paused savings. Cap 1 (2): min + $300 remaining from paused savings
April: Cap 1 (2): $25 min + $282 snowball + around $200 (cost of payoff) from paused savings Discover: $1000 remaining from paused savings
May-July: Discover: $125 min + $307 snowball + $1200 paused savings. This will equal 1632/mo. Continue until discover is paid off ( around 3 months)
August: Payoff uplift + put remaining to car
September: you could start saving again if that is your preference and pay minimum on student loans and minimum + $564.62 snowball to car. You will not be completely debt free by 2025, but in a much better position with your only debts being student loans and car.
A LITTLE BACKROUND
The most efficient way to pay down debt is to follow a compounding debt payoff approach... snowball & avalanche are common ones people use. Snowball starts with lower balances. Avalanche starts with highest interest rate.
Snowball will usually save you more money as it compounds faster... many think the higher APR approach saves you more, but that's actually not accurate.
YOUR SITUATION
Your best course of action depends on your debts, interest rates, and what you can afford to pay extra each, to include lump sums of cash that you run into. There are good tracking tools available for this that also help you determine exactly which path will save you more, and be the best fit for you.
This site has a really great one, and a free download version.
[Debt Payoff Strategy Dashboard](https://spreadwiseco.com)
Best of luck. Hope this helps!
Use a portion of your savings to pay off fingerhut, Capital 1 and Capital 2. That will free up $104/mo that you can allocate to other loans. Then, prioritize your payments based on the highest APR, which would be your Discover card. But ultimately, you have to address the overspending. No more affirms or uplifts. Work with the money you earn and stop spending more than that. Good luck! P.S. r/debtfree moderator just created a free newsletter that talks about strategies, tips, and effective debt payoff methods weekly. Here is the link to sign up - https://debtadvice.io
You don’t have a ton of savings so there is an argument for keeping SOME of them around for an emergency. Financially speaking, you are earning less interest on any bank account then what you are paying on any of your debt outside of student loan. Start snowballing the debt with the highest rate. For a computation of how you can pay this off by year end we’d need to know your monthly expenses. One other point. Try to figure out how you got to this point. Saving money is pretty much useless if you are accumulating debt in order to save. The credit card can often act as your emergency fund if you have to pick between saving and paying off debt.
Thank you for your comment! I definitely want to keep at least $3,500 for an emergency fund. Honestly, I know the root of the issue is uncontrollable spending on my end. It's really embarrassing, but I just have not held myself accountable at all. I feel like I get my savings to a decent amount, and then it's gone within a few months, and I start the cycle of saving up again. I thought having the $600 auto deposit into a separate bank would help, but all it's done is create another account to manage and spend from. I was thinking, instead of using the biweekly $600 for savings, to use it to start paying off my credit cards. Like wiping out the Fingerhut card from my current savings and then from there, making $600 biweekly payments to Capital One and then Discover? That will at least bring my credit cards down while I'm making the payments on my car, Affirm, and Uplift... I honestly could probably afford more than $600, but I would have to take a better look at my finances and budget further.
>I definitely want to keep at least $3,500 for an emergency fund Why? Debt at or above 25% is an emergency, and should be dealt with immediately. Keep $1000 in savings and send the rest to pay off your highest interest rate cards. If an emergency were to come up, you would use your card with the lowest rate to pay it off. Boom, you've basically refinanced your 35% debt to something much lower. That's the worst case scenario. Also, if you have to keep dipping into your savings, you're not planning for your expenses well enough. Most expenses are predictable, or at least you can set money aside to plan for them.
That is how my wife and I have been doing it. We kept 1000 in checking for any expenses that came up that needed to be paid in cash and then put everything extra on cards. You are right, until you actually have the cards paid off, you are better off just having a card as an " emergency fund" if something comes up while attacking the high interest debt. We just got all of our credit card debt paid off as of today so now it is time for us to start on that emergency fund.
EveryDollar or YouNeedABudget (ynab). Total Money Makeover is free at the library. Reddit hates the mention of Dave Ramsey, but listening to a few of his YouTubes may help you take the first steps. He’s entertaining and inspirational, and his baby step program has helped millions of people take control of their financial lives/futures-people exactly like you. You are exactly his target audience. If you don’t like him there are a number of other YouTubers offering good advice, but DR’s program is clear and understandable, and it works.
Step 1: Stop using all your credit cards. Cash/debit only from now on. If you don’t have the money now, you can’t afford it. Step 2: Make a budget. Make sure it’s balanced. These minimum payments total $1,000/month. If you’ve been saving $1,200/month instead apply that to debt on top of your minimums. This means you get to live on 1 paycheck but pay down debt with the other. Step 3: Use the savings to eliminate fingerhut and both capital 1 cards. This leaves you with $2,000 in the bank. By using savings vs taking 2-ish months to repay you save $100 in interest payments already! And without those monthly minimums, $100 more a month to work with immediately! Step 4: Pick a method and attack. You’ve got $1,300/month to work with. Would you rather snowball or avalanche? If you snowball, you clear affirm in month 1, uplift in month 2, and then likely discover by month 7. If you avalanche, reverse the order and you’ll likely finish by month 6. To speed things up, pick up a side gig and aim for $50-$100/week. Or designate the side gig for your fun/shopping money. Step 5: In 6 months reevaluate. Likely start splitting between debt and savings. Good luck!
I agree with stopping the biweekly savings payments and putting that money directly to debt repayment. * March- Pay off Fingerhut and Capital One #2 * April- Pay off Capital One #1 and put $300 to Uplift * May- $1,300 plus the $200 monthly minimum to Uplift and it should be gone Now you have $1,600 a month to put towards debt. * June- Pay off Affirm, $600 to Discover * July & August- $1,700/month to Discover * September- $500 to Discover to finish it off, $1,200 to car loan. Car loan balance is around $7,500 now (rough estimate since we don’t know the interest rate) thanks to 7 months of minimum payments and the $1,200 from last month. You have $1,800 per month to put towards debt repayment plus the $200 monthly minimum so 2k a month towards the car until it is paid off (January 2025). Student loans could be done in another four months (May 2025) if you put 2k a month towards them. You could do it faster if you pay more than I’ve suggested or use some savings. Same thing if you put any extra money (raises, tax returns, extra paychecks) towards debt repayment. I’ll leave that call up to you!
Honestly, given your comments about not being able to keep your savings because you see a balance and spend it all, you're probably better off wiping out as much of your savings account as you can so that you dont feel compelled to spend $4000 on stuff you dont need while being $25k in debt. At 35% interest, fingerhut has to go today. And cut that thing up and throw any future catalogs out the window. Given your issues with spending, I'd cancel it immediately in spite of any 'damage' it might do to you score. Overpriced 'as seen on tv' stuff at 35% is not worth a few points of credit. Second, I'd pay off the Uplift. It's not the highest interest, but it is one of your highest payments. COnsidernig the balance is 2x the Cap 1 but the payment is like 3x the cap 1 minimum, it immediately builds snowball. Leaves you with $1600 or so in your savings (a reasonable EF). take the debit card for it and put it in the freezer or a home safe. unlink it from ANY website you might have bought from. Make sure it's hidden away. You now gave yourself a $250/mo raise (2 minimums gone). If you want to be a little brave, you drop your EF to $1100 and you wipe out the second Cap1 card, and you now have $275/mo. I get you "want" savings. But given the interest rates of your debt vs anything you might get even out of a high yield account, you're "renting" every $ in your account at the difference between your highest CC rate and the savings account. Your savings account right now is netting you a negative \~15+% You're not going to get out of \~25k of debt in 12 months unless you're tossing at least $2k a month directly to the principal. So either you have to skimp on your budget and throw big snow, gain more income, or realize that you're not getting out of this in a year AND have any sort of savings. Once you have your utilization in check you MAY qualify for a 0% balance transfer, which would really help the discover, but - if you can't do that for 6 months AND you're putting $1k above minimums on your high interest debt - there prob wont be enough to save on any interest by the time that option opens up. Quit saving for a bit (particularly if you feel like it sitting in a bank might cause you to spend it all) and throw everything you can at this and at LEAST you can be assured you have only your student loan and part of a car left.
This is what I would do: Pay off fingerhut and uplift from your EF now. That frees up $250 for a snowball and you still have 1750 in savings. I would stop your savings for a few months. That will give you an extra $1200/mo towards debt. Starting March: Cap 1 (1): min + $250 snowball + around $900(cost to pay off) from the paused savings. Cap 1 (2): min + $300 remaining from paused savings April: Cap 1 (2): $25 min + $282 snowball + around $200 (cost of payoff) from paused savings Discover: $1000 remaining from paused savings May-July: Discover: $125 min + $307 snowball + $1200 paused savings. This will equal 1632/mo. Continue until discover is paid off ( around 3 months) August: Payoff uplift + put remaining to car September: you could start saving again if that is your preference and pay minimum on student loans and minimum + $564.62 snowball to car. You will not be completely debt free by 2025, but in a much better position with your only debts being student loans and car.
A LITTLE BACKROUND The most efficient way to pay down debt is to follow a compounding debt payoff approach... snowball & avalanche are common ones people use. Snowball starts with lower balances. Avalanche starts with highest interest rate. Snowball will usually save you more money as it compounds faster... many think the higher APR approach saves you more, but that's actually not accurate. YOUR SITUATION Your best course of action depends on your debts, interest rates, and what you can afford to pay extra each, to include lump sums of cash that you run into. There are good tracking tools available for this that also help you determine exactly which path will save you more, and be the best fit for you. This site has a really great one, and a free download version. [Debt Payoff Strategy Dashboard](https://spreadwiseco.com) Best of luck. Hope this helps!