Order of Debt Payoff

iVillage Member
Registered: 06-02-2008
Order of Debt Payoff
3
Mon, 11-09-2009 - 1:36pm

Hey ladies. I just lurk around here but I do now have a question! :) I am due to be off on maternity leave in Feb, with baby girl #3, and so pretty much all of that is without pay after I exhaust my sick/vacation days. We have 3 credit cards right now all that have about $1500-2000 on them. And we have about $6500 in savings. I really want to pay them off, but I am scared to not have ANY in savings in case we need to dip into it after baby comes... any advice?


Andi (30) DH (30)

DD1 (6) DD2 (3 1/2) and #3 EDD 2/15/10 PINK TEAM

Avatar for sirrahn
iVillage Member
Registered: 03-26-2003
Mon, 11-09-2009 - 2:01pm

Did you mean that each card has that much on it or is that the total? If each card has that much, in some sense, you don't really have that much money in savings because you also owe that much (and if you're paying interest on your cards, you're actually in the hole).

You could pay the cards off, have the monthly payment amount back in your budget to spend on necessities, save yourself the interest, and then live within your means while building your savings back up. I would try to keep at least 1000 in savings if you don't think you could get back to that quickly though. Stuff does come up. Is it possible to live on just your DH's salary if you're careful?

If you don't go that route, the general recommendation is to pay the smallest balance off first while paying the minimum on everything else, then apply what you were paying to the first to the next smallest until it's paid off etc. until you're done. HTH!

iVillage Member
Registered: 10-05-2009
Tue, 11-10-2009 - 1:30am

This is what (I think!) I'd do.


You have 3 cards with a total of about $6000 on them and about $6500 in savings. Pay off the cards completely. You'll still have $500 in savings. Then, lets say you've been paying $50 a month in payments to each card, a total of $150 a month on the 3 cards, so then start paying that into the savings each month. Now, if you hit an emergency, you can still use the credit cards if you need to (and cute shoes isn't an emergency! LOL) but you'll still have some cushion in the savings.


Like the other poster said, if you owe as much as you have saved but you are paying interest on what you owe, then you are really in the hole anyway. If your cards are at 18% interest (and if I did the math right) you are paying about $30 a month per card in interest OUCH! Pay them off and pay yourself that $30 x 3 each month instead.

iVillage Member
Registered: 06-02-2008
Wed, 11-11-2009 - 12:24pm

Yea I meant I have that much on each of them.

Andi (30) DH (30)

DD1 (6) DD2 (3 1/2) and #3 EDD 2/15/10 PINK TEAM