I'm 28, I'm single, and I'm in a lot of debt. The most sizable chunk of this is my mortgage, but still, that's a big number. ($231,108.76)

I'm working on paying off everything and getting a decent sized emergency fund put together before focusing on the mortgage, but here's more or less what I'm looking at:

CC#1: $1,928.48 @0% -> did a 0% balance transfer from CC#2 after car accident and some extra costs
CC#2: $327.04 @13.99%-> I make all purchases with this rewards cc and pay it off in full each month, except, well see above.

Loan#1: $23,718.81 @ 11.75% -> unsecured consolidation loan.
Loan#2: ~$12,000 @6% -> vehicle
Loan#3: ~$14,000 @4.375% -> student loan


Mortgage: $180,702.80 @6.75% -> house

Credit Union:
Short Term Emergency Savings: $600 -> should be at $1000 but I needed that for an accident deductible.
Junk Savings: $1.38 -> had been getting $100 a paycheck direct deposited before I opened the ING accounts

ING Direct
Long Term Emergency Savings: $20 -> will have $100 a paycheck direct deposited.
Short Term Toy Savings: $20 -> will have $25 a paycheck direct deposited.

I just opened the ING direct savings accounts this week, so I probably have a few too many right now. I figure I'd keep $1000 in one of the credit union accounts, close the other, then try and forget I even opened the ING direct accounts until there's a big emergency, or there's something I want to buy (I'm thinking rollerblades or a bike to make the dog walks a little more energetic (for the dog)).

What's not included here is the $3000 TSP loan I had outstanding, but I sent in a check to cover that on Friday. The plan for now is:

1.Put $400 into the emergency savings.
2.Continue paying off CC#2 each month
3.Start hammering away at Loan#1. I'm sending $600 a month now, but I want that bumped to at least $1000 if not $1200.

I'm not going to worry about CC#1 until it gets close to when the 0% transfer promotion wears out. I need to find the last statements for Loans 2&3 so I can figure out how much is left on each of those.


Comments? Criticism?

You scared me at first, but knowing that you included your mortgage this number is not large at all, if everyone on here added their mortgage to their debt I bet more than half the people on this site would have significantly more debt then you.

Adam, you are a complete mess, and I say this with sincerity. first, create a budget. you have the brush strokes of what you owe in terms of debt, but nothing else is here. $25/paycheck for toys? really? presuming you get paid biweekly that is $650/yr. really, do you need to get rollerblades or a bike to walk the dog? number one, rollerblading or biking with a dog is just dangerous. two, find a field or dog park and throw stuff for him to fetch or let him run. it's good you seem energized into paying debt off, but you should be looking at your spending also and trimming that down. if you don't know how much you owe on two large debts, that is a problem. with over $25k in unsecured loan that isn't student loan, that is huge, and you need to also focus on trimming expenses. sorry, there shouldn't really be a "toy" savings acct.

googoo now, you are correct in that Adam is a mess and needs to come up with a serious budget and then we start offering a plan of attack. You are also dead on that this "toy" account needs to go.

However danger should not preclude one from doing something After all, adrenaline rush is a wonderful feeling.

Adam, you should create a full budget, detail out your spending. Take a solid week and go through every bill you have and trim any unneeded fat. (Like $5.00 for nights and weekends starting an hour earlier...cable channels you don't use.. etc etc)

Check your tax return to see if your getting back more than $1,000. If so, adjust your withholding's so you get more back every week.

Then once you have maximized your current dollar: Go ALL IN on ONE bill. To the exclusion of a savings account and other pay offs.

Tackle CC#2 first: Get that thing gone, cut up, tossed out and closed up.

Ignore loan #1 for now until CC #2 is finished. Once that happens, go through your loans and figure out which is your largest monthly payment between loans #1, #2, and #3.

The chances of you being able to finish paying off Loan #1 thru Loan #3 before CC 1 starts accruing interest is pretty small. So, just tackle CC1 out of the way as soon as possible and be done with it.

Also, there is a reason why people say pay off the debt with the lowest balance first often: The time it will take you to pay off loan #1 is over 2 years. After 2 years you still have 2 other loans and 1 credit card left with little to no progress. If you go in reverse, in the same time period, you could pay off CC#1, take what payment you had going there, put it into Loan #2 with all other money you can, when that pays off go to loan #3.

This way at the end of two years all you have debt wise is:

Loan #1
Mortgage.

But you also don't have minimum payments from other debts bogging you down.

I don't know, the previous posters sounded a little rough. I do agree that you need to include a little more detail of your finances for a full picture: for instance, is that $180k mortgage on a house worth $150k, or $400k? Do you have any retirement savings? What's your overall income, if you can 'maybe' get up to $1200/month on Loan 1?

It sounds as though the balance on cc#2 is just the current months expenses, in which case I assume it's covered under your regular spending category. How long is it until CC#1 needs paying? You might aim to have that money on hand the month before the rate changes, perhaps you could contribute extra to your ING longterm savings account (so you don't touch it) and then you'd have that dealt with. (So, um, if it's 10 months until the rate change, add $190/month to the automatic savings plan.)

I assume you are currently paying the minimums on all your loans - what is that? What is your monthly mortgage payment? (About $1100?)

As for which order to deal with the loans, it depends on your temperament. Some people prefer the snowball (smallest balance first), some people would rather know that they are doing it mathematically (largest rate first).

I guess I should have elaborated more if I wanted the best constructive criticism. I have a budget, but I'm still working on finalizing it (again) because I just got a $6500 raise. I get 26 paychecks a year, but I only budget for 24, meaning those two extra paychecks always go straight to debt. I net about $1950 per paycheck after $100 automatically going to savings (so $2050 before savings, but not including the new $25), and 7% (about $230) going to my retirement for the full 5% match from my employer.

My last budget looked something like this, just including fixed bills:
House $1306
Student Loan $138
Consolidation Debt $560 (I've set it to $600 for a nice even number before figuring to set it to $1000 or $1200+)
Geico $100
Cell $50
Water $60
Gas/Electric $100
Cable $112
Auto $203
-----------------------------
$2669 (assuming $600 vs $560 for consolidation loan)

Income $3900
Expenses $2669
-----------------------------
What's left $1231

I've been attempting to limit groceries, going out, medical, entertainment, and gas to $500 a month, but I keep breaking that. If I don't put the extra $50 a month in the toys/entertainment category, I will spend that money anyways, I've been going through and tracking this stuff for the last year, so I know. So lets subtract the $50 for the two $25 deposits and that leaves me with $1181. If we're talking 0 sum, I should actually have $1781 a month for the consolidation loan (assuming that's my #1 priority and I'm keeping discretionary spending to $500 a month). But like I said, I've only received one or two of these larger paychecks so far, so I've been recalculating, and I probably won't be able to send that much till March just to be cautious. The length on that 0% is at least 6 months from now, oh, and I get one of those two extra paychecks in March, so that can cover the whole thing anyway which is why I'm not concerned about it at all.

Oh yeah, I just remembered about the dog. I never seem to budget for him, and he keeps seeming to cost me close to $200 a month! I take him to the park on weekends, but I can't do that on weekdays because they close at 5, oh, and for some reason he won't fetch unless it's inside the house. I walk him at least a mile a day otherwise, but that doesn't seem to be enough, I figured it would be better to go a faster pace with him to make him run.

I'm not cutting up CC#2, I got it specifically to make all my everyday purchases on to receive rewards with, and to pay in full every month.

What else.... I'm already taking 3 exemptions, but I still got $2800 back in taxes, which as I said is already spent. I already changed that to a 4, and I'm going to see how that shows up in my next paycheck to see if I can keep it that way all year, or if it's what I expect, do it for 6 months then switch back to 3.

Sounds reasonable. If you put $1500 towards the consolidation loan, then roll that into the other loans when that's finished, they should all be paid off by June 2011. (not counting your extra paychecks, or any potential changes to your finances).

Hrm... Adam.. in that case with better numbers, your not looking so bad. Your aware of your situation which makes you WAY Better off than most!

Also, Student Loans, Car Payment, and Mortgages are something that almost everybody has and is pretty much standard.

Your only really bad and strange debt is your consolidation debt.

So, never ever stop your 5% 401k match. Obviously that is free money.

Your savings however: Once you get your savings up to $3,169 I think you can stop your savings. That number is your monthly expenses + your 500 extra for life. It is only one month, but when your trying to get down your debt it can be a bigger deal to have an extra 2,600 a year for debt reduction.

Okay, so CC#2 really isn't debt per say. It is more just your vehicle for better tracking of your finances and rewards / credit billing. Fair enough.

I think the best thing you can do in my opinion is pay off your car. It looks like it is a 60 month term loan?

Instead of shifting all your available extra into your consolidation debt. You can pay off your car much faster. That would free up $203 a month. (Hey that would cover your dog! ) But yes, I would target your car first. You can use that to make the biggest monthly impact on your financial savings and reduce some mandatory monthly costs that you have so in the event something bad happens you have more breathing room.

Obviously at some point in there you'll have to pay off CC #1.

After you car is paid off then I would go back to a debt payment / savings hybrid and attack that consolidation debt. Your student loan is fine with just min. payments for now as it isn't gouging you on interest.

Looking back this morning I can see that I made a mistake:


I have to take the $500 out of this number before I start putting it towards debt so that I can actually pay CC#2 in full each month. So to re-calculate...

$1231
-$500
-------
$731

Ok, so if I add that to the consolidation loan it'll be $1331, if I add it to the auto payment it'll be $934. I'll have to run this through some spreadsheets and get back to 'me' (my journal).

According to this debt calculator, paying my Consolidation loan off first will save me close to $2,000 in interest vs paying the auto loan first. This doesn't count the two extra paychecks a year, or take into account how much my take home pay will change when my withholding is changed to a 4.

It turns out my first extra paycheck is actually in May, not March, but that doesn't really change anything if I'm just holding it for CC#1.

does that debt calculator count for the fact that your auto payments will be rolled into your consolidation loan?

I'm really curious is all. If it works out that the consolidation loan is better to pay off first, by all means do it. It just seems that the fastest way to make an impact on your monthly living expenses is the Car Loan first then move on from there.

Indeed it does (this one includes some of those extra payments):

Gotcha. Hrm. Then yeah I guess your all set with going all in on consolidation.

Alright, the $3000 check cleared for my TSP loan today, so that is out of the way. I went ahead and transferred $400 from my checking to my short term emergency savings for a total of $1000.

So now I can concentrate on the consolidation loan (and paying the credit card off each month).

Adam, thanks for the link to the spreadsheet, it's really helpful
I played around with it all night yesterday