Snowball, avalanche, or savings?

[haapai]

I wish that there was a way for you to figure out in advance what the minimum payment on the BT card will be.  I've never been successful at figuring out it was calculated by reading disclosures or the faint, tiny print on the back of the statement.  I've always had wait until there no new charges and then calculate what percentage of the balance they will want. 

[TheOtherMe]

I have a card with a BT on it.  I keep the actual card where I keep my checks so I don't use it by mistake.

I take the balance and divide it by the number of months left on the 0% and pay that every month.

If I paid the minimum payment every month of $115, it will take 19 years to pay off the card and I will end up paying almost $17000 for a $5000 BT.  If I pay $206 every month, it will take me 3 years to pay it off and cost me $7500.  That is more palatable but I prefer paying the $400 each month and being done with it.

Have to stop taking so many trips and buying new furniture.  Trip to  Toronto in late March was paid for by air fare credits.  There will be two nights at an airport in Chicago, one at a higher rate so I can park my car there.  My guest suite will cost right at $700 US for 7 nights.  The door says $300 CN on it.  I think it's like hotels when I see the rates on the door.  I have never paid the rate on the door.  

Nothing went on any card for the bathroom renovation.

[nidena]

I don't plan on paying the minimum on the BT for the life of the BT, only while I'm focusing on paying off the Visa so, basically, avalanching my debt.  I'll probably leave the PL as is unless I come into another chunk of change.

[haapai]

The functional, useful life of this balance transfer offer might be 10-12 months.  You've only told us the introductory terms and as far as we know, it could turn into a rotten, stinking pumpkin after 12 months. 

Personally, I'd aim for getting rid of it by 10 months, well before the terms turn whatever.

What I do not understand is your willingness to hold onto the PL at 7.4%.  That's not a good rate.  You've also told us enough for us to see that you have the discretionary income that will allow you to retire all three debts -- the current credit card debt, the personal loan, and the shape-shifting balance transfer -- by August 2023 or earlier. 

I'm really confused by your willingness to hold onto the personal loan unless you come into a chunk of change.  Am I missing something?   

[nidena]

Jan 12, 2023 18:02:29 GMT -5 haapai said:

The functional, useful life of this balance transfer offer might be 10-12 months.  You've only told us the introductory terms and as far as we know, it could turn into a rotten, stinking pumpkin after 12 months. 

Personally, I'd aim for getting rid of it by 10 months, well before the terms turn whatever.

What I do not understand is your willingness to hold onto the PL at 7.4%.  That's not a good rate.  You've also told us enough for us to see that you have the discretionary income that will allow you to retire all three debts -- the current credit card debt, the personal loan, and the shape-shifting balance transfer -- by August 2023 or earlier. 

I'm really confused by your willingness to hold onto the personal loan unless you come into a chunk of change.  Am I missing something?   

I'm not sure if you're missing anything.  My CC is $11,800ish, as of today.  My PL is $4,250.  I made my January payment to each of them on the 1st.  My next payments will be on Feb 1st and Mar 1st and the balances should be around the amount in the OP.

Once I liquidate the VA (at its no penalty date of Mar 1st, I'll have just over $5500 and the CD will mature at the same time and have an amount of $1005.

Once I get the BT capability on the new card, I will transfer an amount equal to the highest round number to it.  With the current limit, that would be a transfer of $5000 on a $5400 limit card.

That will put me at $6800ish on the Visa, $5000 on the new card, and still $4250 on the PL.

Come Feb 1st, I will pay as much as I can towards the Visa and (we'll say) $100 to the new card and the usual $156 to the PL.
Come Mar 1st, liquidate the VA and put that $5500 towards the Visa, liquidate the CD and put that towards the Visa, make a payment equal to any amount that still needs to be paid to the Visa.  Then use the difference from my usual Visa payment and put it towards the PL.  Pay $100 towards the new card (or whatever its stated minimum is).

If I come into another chunk of change, I will put it all towards the PL at that point.  Otherwise, I will just snowball my Visa payments to the PL since 7% is higher than 0%.

I guess you just needed to explicitly state what was in my head. 

[haapai]

Yeah, you're right, I really was angling for more solid numbers and dates. 

I'll put them to work in building more solid projections than I have done so far, over the weekend. 

You appear to be in much better shape, financially (your current balances are lower than I expected) and organizationally than I ever dared hope. 

You didn't have to do this just so that I could entertain myself building spreadsheets.   

I really think that you have the ability to extinguish your current credit card debt, your personal loan, and your balance transfer credit card debt by July or August. 

Opportunities to completely reset like this are not particularly common or easy to spot.  It hurts me to see someone not taking maximum advantage of them. 

[haapai]

It took me a while, and I'm uncertain of the results, but it looks like you should be able to get the whole mess paid off in May. 

This will only happen if you are disciplined about applying what you would have paid to one debt to another. 

It also looks like when the annuities mature, you will be able to pay off both the existing credit card and the personal loan. 

There is no reason to slow down then.  I'd everything freed up by paying off the CC and the PL towards the BT.  I wouldn't worry about paying down a 0% debt when you could be making 3% in interest.  Just pay that time bomb off.  

[nidena]

I'm not able to increase the limit on the new card to accommodate a larger BT so $5000 is the amount that I will transfer once I receive what I need from the bank.  I also found out the CD doesn't mature until June 2023.  I could have sworn it was March but it's not a big deal.  I will use the Annuity, as planned, to pay down the Visa. 

[haapai]

Even without the CD maturing at the time that you expected, there should be a lot of the annuity left over after paying off the CC ( @ $3K) that can go toward the personal loan.  That should reduce it enough that it can be eliminated in the first few days of the next month.

If you are rigorous about applying the left-over/spillover to the next debt, by the time the CD matures, you won't be able to apply it to your existing credit card debt, personal loan, or the balance transfer credit card because they will all be paid off. 

[Rukh O'Rorke]

Jan 11, 2023 9:50:53 GMT -5 minnesotapaintlady said:

I do better if I can focus on one thing, so the snowball method would work better for me.

I doubt I would consider the Roth over 7 and 12% debts.

I like the interest minimized as much as possible….I go for avalanche!

[haapai]

Jan 19, 2023 19:16:35 GMT -5 haapai said:

Even without the CD maturing at the time that you expected, there should be a lot of the annuity left over after paying off the CC ( @ $3K) that can go toward the personal loan.  That should reduce it enough that it can be eliminated in the first few days of the next month.

If you are rigorous about applying the left-over/spillover to the next debt, by the time the CD matures, you won't be able to apply it to your existing credit card debt, personal loan, or the balance transfer credit card because they will all be paid off. 

I'm sorry to say this, but the post above was too rosy.  I probably should have posted this earlier but I was embarrassed. 

I think that I had a second January payment in the prior spreadsheet.  That threw things off and made it look like you could pay the credit card off when the annuity matured and even put some extra toward the PL. 

The way the numbers fall now is much less exciting.  You won't be able to extinguish a debt every two months.  Instead you will have some intervals of three or four months without paying anything off.  It's going to be a bit of a slog. 

[nidena]

Jan 25, 2023 16:33:25 GMT -5 haapai said:

Jan 19, 2023 19:16:35 GMT -5 haapai said:

Even without the CD maturing at the time that you expected, there should be a lot of the annuity left over after paying off the CC ( @ $3K) that can go toward the personal loan.  That should reduce it enough that it can be eliminated in the first few days of the next month.

If you are rigorous about applying the left-over/spillover to the next debt, by the time the CD matures, you won't be able to apply it to your existing credit card debt, personal loan, or the balance transfer credit card because they will all be paid off. 

I'm sorry to say this, but the post above was too rosy.  I probably should have posted this earlier but I was embarrassed. 

I think that I had a second January payment in the prior spreadsheet.  That threw things off and made it look like you could pay the credit card off when the annuity matured and even put some extra toward the PL. 

The way the numbers fall now is much less exciting.  You won't be able to extinguish a debt every two months.  Instead you will have some intervals of three or four months without paying anything off.  It's going to be a bit of a slog. 

It's all good.  I was taking it for the optimism that it was.  As it is, I'm waiting for the BT to clear and will be calling USAA about my VA liquidation tomorrow to see when I can proceed with that next step.

[nidena]

Found out that there will be an IRS penalty for liquidating my Annuity since I'm not 59.5.  I'm sure I won't have to deal with that until I file for 2023 so I'm not going to stress it.  I will have time to recover from that $550 in the decade and a half before I hit 59.5.

I will probably liquidate the CD early since the interest rate is darn near nothing.  Three months worth of interest (give or take) SO will not break me since the rate is .22%.  Not even a full percent.

So, come Feb 27th, I can ask them to deposit the funds into my checking and use it from there.

[haapai]

It's a painful penalty when you look at it short-term, but well worth it when you consider the 1% yield and how long you would have to let it rot away with inflation to avoid the penalty. 

Just get this damn debt behind you and organize your life so that these kinds of thing do not happen again.  You don't need to flagellate yourself over past mistakes.  What really matters is not repeating them. 

[TheOtherMe]

The penalty is 10% of the amount withdrawn.  It's least painful if you have that withheld from the annuity.

[nidena]

With the Feds raising rates again, it's good that I'm tackling this now.

Visa       12.65%                       $4420 but will be $0 come March 1st
AmEx     13.65%                       and paid off every month since Nov
MC         0% until Jan 2024        $5200

I cashed out the CD and have 25 days until I can liquidate the Annuity.

[nidena]

I liquidated the CD and put that towards one of the CCs.  I don't remember which one.

I emptied a savings account that had a $3500 balance and put that towards the Visa.  I made a payment from my Mar 1st paycheck and paid off the remaining statement balance for that.  It still has a balance because I use it and one of the things I had to pay for was to put my cat down last week.  That cost me $600 of the current $900 that remains on that CC.

I paid off my AmEx completely, statement balance and everything over that.  It is sitting at $0.

I'm going to roll the Annuity into one of my IRAs, thereby avoiding all penalties.

I still owe on my PL but will just pay extra each month until it's gone.  It will be paid off long before its scheduled payoff date of July 2025.

I'll be paying $200-$300 each payday towards the BT on the new card.  Today's payment takes it down to $4800 from the original balance of $5200.