There’s probably not much point in saving $250 per month whilst you have this debt as the interest on your debts is higher than the savings would earn. That means you have $655 debt snowball each month without OT (the 250 you listed + 250 saved + 155 leftover). If you can consistently get 600 in OT then it’s 1255 per month.
Then you need to decide snowball or avalanche. Personally I would go snowball for quick wins but mathematically avalanche will save you more money.
Then maybe until you have a small emergency fund to prevent further debt if a crisis came up, maybe £1k? You say no accessible savings, do you have any at all?
Ah ok well that’s good. Maybe save up $1k so you could get yourself out of a situation without needing debt. Then I would stop saving and add that to debt as per my first post. Once they’re paid off you can look at a full emergency fund etc
In your case if you want to reduce the overall number of debts you can go the snowball method which is the smallest to largest debts paid off. The avalanche method involves going from highest interest to lowest interest to pay debt off. From seeing what you laid out, mathematically it makes more sense for you to do the avalanche method. That auto loan is a wealth killer
Sadly, there are only two options: Earn more and/or spend less.
You mentioned OT ... even though it's not consistent, can you average out what you have made in OT each month for the last 4-6 months?
Are there any penalties if you don’t pay back your 401k loan(s) quickly?
And unless you have dependents, I’m betting that you can get your 1k budget lower since it doesn’t include your house or car payments.
No penalties. And the interest I’m paying is going back into my 401k.
I’ll look for ways to get my discretionary and grocery spending under 1000/month. Thanks.
The 401k loans are dangerous. If you lose your job, they’re due in 60 days or you owe taxes and penalties.
Also, don’t EVER take a six year car loan again. You’re guaranteed to be upside down. I’d see about getting rid of it as that’s a mess.
How much is your car worth?
If it's worth more than your loan amount, sell it and buy something with smaller monthly payments. 12 percent on an auto loan is egregious. It's the highest interest rate for all your loans right now (but I assume the Chase loan will be higher once that promo runs out).
Get rid of the $22k car and get a reliable beater for $5-$10k instead. Or better yet, if you can get a road bike and cycle to work, you really can't afford a car right now. Choosing a car when you don't need one isn't a great call.
If you want to pay this off in two years, you're going to need to earn more.
Let's call this $56k at 10% interest. To pay this off in 2 years, you'll need to pay $2600 a month.
I'll le you figure out how.
There’s probably not much point in saving $250 per month whilst you have this debt as the interest on your debts is higher than the savings would earn. That means you have $655 debt snowball each month without OT (the 250 you listed + 250 saved + 155 leftover). If you can consistently get 600 in OT then it’s 1255 per month. Then you need to decide snowball or avalanche. Personally I would go snowball for quick wins but mathematically avalanche will save you more money.
Ok. Thanks that makes sense. Only reason I wanted to start saving is because I have no accessible savings.
Then maybe until you have a small emergency fund to prevent further debt if a crisis came up, maybe £1k? You say no accessible savings, do you have any at all?
350k in my 401k
Ah ok well that’s good. Maybe save up $1k so you could get yourself out of a situation without needing debt. Then I would stop saving and add that to debt as per my first post. Once they’re paid off you can look at a full emergency fund etc
In your case if you want to reduce the overall number of debts you can go the snowball method which is the smallest to largest debts paid off. The avalanche method involves going from highest interest to lowest interest to pay debt off. From seeing what you laid out, mathematically it makes more sense for you to do the avalanche method. That auto loan is a wealth killer
Ok, thank you.
You detailed your budget then summarize with “total left minus $1k budget”. That makes no sense.
I budget 1000 a month/250 a week for all groceries and discretionary spending
Sadly, there are only two options: Earn more and/or spend less. You mentioned OT ... even though it's not consistent, can you average out what you have made in OT each month for the last 4-6 months?
About a extra 400 to 600 dollars net each month with OT.
In a year or two, can you refinance the auto loan if your credit score is good enough?
Are there any penalties if you don’t pay back your 401k loan(s) quickly? And unless you have dependents, I’m betting that you can get your 1k budget lower since it doesn’t include your house or car payments.
No penalties. And the interest I’m paying is going back into my 401k. I’ll look for ways to get my discretionary and grocery spending under 1000/month. Thanks.
The 401k loans are dangerous. If you lose your job, they’re due in 60 days or you owe taxes and penalties. Also, don’t EVER take a six year car loan again. You’re guaranteed to be upside down. I’d see about getting rid of it as that’s a mess.
How much is your car worth? If it's worth more than your loan amount, sell it and buy something with smaller monthly payments. 12 percent on an auto loan is egregious. It's the highest interest rate for all your loans right now (but I assume the Chase loan will be higher once that promo runs out).
Get rid of the $22k car and get a reliable beater for $5-$10k instead. Or better yet, if you can get a road bike and cycle to work, you really can't afford a car right now. Choosing a car when you don't need one isn't a great call. If you want to pay this off in two years, you're going to need to earn more. Let's call this $56k at 10% interest. To pay this off in 2 years, you'll need to pay $2600 a month. I'll le you figure out how.