It’s been a long time since I’ve talked debt here, other than accruing it of course. But now that my tax return is in, it’s time to do some debating.
My total credit card debt was $5429.99.
My credit accounts are with Chase (credit line of $2,000, APR 29.99%), Dell (credit line of $5500, APR 27.24%), Express (credit line of $1280, APR 24.99%), Macy’s (credit line of $1500, APR 24.50%), and Target (credit line of $1000, APR 22.90%).
I had set aside $3,000 from the tax return for summer camp and I’ve saved $900 in the mini emergency fund. And then my brain started turning, my mom started making sense, and I paid off the pretty much maxed out Chase.
Now my total credit card debt is $3425 and I have $1900 in savings. I want to keep paying down the debt but I’m hesitant. So help me work this one out.
Child support payments should start coming in regularly again but I’m not exactly sure what, if any, the regular amount will be. I also have no idea how long they will remain regular. His IRS refund was supposedly garnished and that should come in as well in the next month or so. If these things do start coming in the way they should, I would have the money from the summer camp in time that way and the $1900 in savings would not be necessary.
Paying off Macy’s and Target will leave me with $915 in savings. If all hell breaks loose with the child support again, I would have access to those cards in worst case scenarios. Although Macy’s is an unlikely candidate for worst case scenarios, you can get clothes very inexpensively if you know how to shop there and it leaves the Target and Chase card freer for expenses not clothing-related, and honestly, the debt on it is tiny– less than $50.
Paying off Macy’s, Target, and Express leaves me with about $435 in savings. Express is not as practical as Macy’s can be and Dell is clearly useless for survival. Of Target, Express, and Macy’s, Target has the largest balance and is also the most practical but it has the lowest APR, which is still too high in my opinion.
What do you think? My gut says to save everything, but my brain is yelling at me about the interest rates. So the compromise I’m leaning towards is paying off Target and Macy’s right away and then snowball payments at Dell and keep paying minimums on Express. Use any further child support payments to ramp up savings for Summer Camp ($3000) and to cover kid expenses as needed. Or do I just ice the debt repayment for now, bulk up savings, and go snowflake on what’s left?
nicoleandmaggie
March 8, 2013 at 10:12pmYou have to know your headology. (I’ve been reading a lot of Terry Pratchett, can you tell?)
If it were me, I would pay off the highest interest rate cards and leave just enough in my bank accounts to make sure I didn’t trip any fees (or if rent can’t be paid with CC, then I’d make sure I had enough to cover a rent payment and not trip any fees). Then I would use the credit cards in case of emergency. I hate wasting money on high interest debt. (I might also look around for a 0% teaser rate.)
But that doesn’t work well for everybody. Some people really do need the separate mental accounts and once they start putting things on cc again, they don’t stop. For them, keeping the larger emergency fund makes sense so they can draw on that for emergencies and deal with the debt separately from regular spending. (And the 0% teaser rates often come with gotchas if you can’t pay them off after the time period is over– if there’s any chance of that happening, don’t do it!)
When are your summer camp payments due, and do they take credit card? (Again, if it were me, I’d use the summer camp money to pay off the credit cards even if I knew I was going to have to put it on credit card again, just so I didn’t have to deal with the interest payments during the interim.)
Also, if you haven’t, call up your credit card companies and ask for lower interest rates, even if they only last a little bit!
admin
March 8, 2013 at 11:29pmI’m going to have to google headology and Terry Pratchett because I’m clueless on that aspect.
Summer Camp will probably be due in May. And actually I’m trying to get info on a more affordable option with the YMCA. And yes the camp they usually goes to takes credit cards. And that’s pretty much what I had been thinking– I could use the cc to pay the summer camp worst case scenario. That’s why I paid off Chase without hesitating.
I’ve called my credit card companies repeatedly and finally gave up. They all told me the exact same thing– they periodically adjust the rates and it has nothing to do with my payment history with them, it has everything to do with my credit report. Chase flat out told me they couldn’t do any reviews of APRs themselves, they were automatically done. I had escalated it to supes more than once and just gave it up. The other card companies told me the same thing– credit report is final. And since my credit report is shot with the foreclosure and more recently K-Fat’s repo, it’s not going to happen.
nicoleandmaggie
March 8, 2013 at 11:34pmoh jeez, yeah, I wasn’t realizing he’d destroyed your credit… when your credit is good again, they’ll be willing to work with you (but by then you’ll be making plenty of money and won’t have any cc debt!)
You haven’t read any Discworld books?!?!!!?!!!! Next time you’re at the library!!!!!! The first two aren’t as good as the rest (but they’re still pretty good)– they get better and better and better. You can read them out of order. I’m in the middle of Wyrd Sisters. Granny Weatherwax is all about headology– basically another word for psychology.
Mutant Supermodel
March 9, 2013 at 12:26amAwesome. I will add them to the list for sure then. I wish I lived in a library…
nicoleandmaggie
March 9, 2013 at 12:27amI know, right? Wouldn’t that be the most awesome thing ever?
Even better than the mixed up files of mrs basil e frankweiler, eh?
Mutant Supermodel
March 10, 2013 at 12:06amYes! Although THAT was also really awesome
nicoleandmaggie
March 9, 2013 at 2:14pmOh! And your oldest can start with Wee Free Men. That’s the first of the YA Tiffany Aching books. (Which are discworld, but somewhat separate from the other discworld books as they’re YA.)
Mutant Supermodel
March 10, 2013 at 12:09amOh awesome, thank you! I’ll add that to the list.
Mysti
March 8, 2013 at 10:23pmThose are insane rates…have you considered a Lending Club loan? Consolidate it all at a MUCH lower rate.
If Target is survival, then I would get that one as low as possible, so it has the most room to charge stuff, if it came to that. I would pay that off, go minimal on everything else for the time being until you know you have what you need for camp. Then go at the cards hard core (as much as you can)
admin
March 8, 2013 at 11:31pmI actually did try for a Lending Club loan and was denied. My credit is shot and has the recent repo of K-Fat’s car. I wouldn’t trust me with a loan either if I saw my report, you know? Yeah I think Target’s gonna have to get paid off. The interest is high, the balance is high, and i could use it in a tough spot if God forbid I found myself in that situation again.
Mysti
March 9, 2013 at 1:35pmSorry Lending Club didn’t work out. But I think you have a solid idea of what to do.
So camp is $1000 per kid? OUCH. Ours is $500 per kid, due late May, early June. Is it something that your parents would be willing to help with in a pinch?
Mutant Supermodel
March 10, 2013 at 12:08amYeah but they help with a lot already so we’ll see. My dad likes to put Eldest in a sailing camp for a few weeks. He might do that again. I’m looking into the cheaper options– I might do the school’s camp for a little while if the hours work out and I’m looking into a supposed YMCA program offered down the street.
bookishbiker
March 9, 2013 at 12:52amGiven the extreme lameness of your ex in the recent past, you’re smart to not rely too much on his payments while you get this sorted out. I think if I were in your situation I’d tend to keep a bit more cash in the bank, and pay off the cards that would be most helpful in case of emergency, and snowflake the rest. Hopefully you will find a more inexpensive camp option, and free up some funds, but you have to pick based on what’s good for the kids too. Good luck!
ps congrats on the blog switch! your posts are all attributed to admin now.. can you change that?
Mutant Supermodel
March 10, 2013 at 12:07amYeah I think you’re right and that’s the best strategy to take on.
Yes!! I actually just went ahead and changed that
Debt Repayment- Alright let's do it
March 11, 2013 at 7:47pm[...] went with what seemed like everyone was suggesting on Friday and paid off the Target card. My credit card debt is now down to $2501.34. I can hardly believe [...]
First Gen American
March 12, 2013 at 4:53pmI am of the same mind as the grumpies here. You have the money sitting there making no interest while paying interest out the ying yang on your credit cards. I’d pay off the balances and work on the camps as a savings goal. If you don’t hit the goal, you charge the balance and you haven’t really lost ground and maybe saved a few bucks in interest fees. The big ? that I don’t know the answer to is if having the credit available to you dangerous? Ie, if you pay off the cards, is there a risk of getting back in the hole because you have access to the credit? If that’s the case, then I’d keep the camp money aside. Of what you have left, now that you’ve paid a few off, how much interest are you still accruing every month? Now multiply that by 4 (months til summer camp). My back of the envelope math says that if you put $3000 towards debt even at 22% interest, that’s roughly $55/month savings (x4=$220). Plus you don’t have to charge all $3000 at once for camp.
I don’t know if this would work but what if you closed your “useless” accounts and asked for a bigger line of credit with a useful account citing the closes. Not sure if it would work or be too damaging to your credit but another idea. Again, only useful if you have enough self control over to not let the balances creep up.
Mutant Supermodel
March 12, 2013 at 11:21pmI’m really strict about credit cards. I take them out of my wallet and put them far away. I had actually paid the Chase one way down before having to rely on it for survival a few months ago. And even then, it took me several months to max it out again.
I honestly don’t think anyone would increase my credit lines because of the train wreck I have on my credit report. But that’s ok. I have the Bank of Mom for when things get desperate. Poor Mom.