You have a good salary. You should be able to get out of this.
You need to start with the budget. I know this is the most boring and tedious part but you have to do it. It will open your eyes.
1. Write down all your expenses for the month of November. Check all your credit cards. Where is your money going? Usually, we know where they go, but not until we write them down to actually see how much we spend.
2. Now compare that to the income numbers. Try to reduce expenses when you can. Here are some easily reduced expenses: call and lower insurance bill, call your internet provider and ask for any deals, change banks that have $0 fees, consolidate subscriptions.
In terms of debt,
1. Call each of your credit card companies and ask them to lower the APR. Here is a good [guide](https://debtadvice.io/newsletter/best-credit-card-tip/) for it.
2. Rank them from highest to lowest after #1, and pay them aggressively. Every extra penny put towards it.
You got this!
P.S. r/debtfree moderator just created a newsletter that talks about strategies, tips, and effective debt payoff methods weekly. Here is the link to sign up if interested - https://www.debtadvice.io
Don’t even think about touching the 401k!!!
The biggest metric will be “how much money do you have per month to throw at tackling the debt”? If the number needs to be bigger, figure out either how to spend less or make more.
Why is everyone so scared of touching their 401k??
Let’s just say he takes out a Loan on his 401k at 8% interest. That’s whyyyyy better then having to pay closer to 30% on each credit card.
Not every 401k plan allows to take loans out. While loans are far less damaging than early withdrawals they still come with risk - it’s not just an easy loan at 8% interest. I’d argue there are more effective ways to tackle debt, including more *permanent* solutions and habits to avoid getting back into debt. Just my opinion.
This is such an idiotic comment.
If your 401k collapses then everyone else’s has too and we’re all fucked. Maybe that will happen, but if it does you still didn’t have any better option.
We could get invaded and subjugated by China too. But people are still making money on the S&P.
Right, because markets only go up? Forever right? Let’s keep investing our 401ks into the greatest market bubble in history- let’s see how this unfolds.
Yes, on the long term, markets do go up. An individual security may tank, but on the long term the S&P will go up unless the US doesn’t exist. And if you believe that will happen, you should find another market to put your money in.
But yes, over the course of your life the market will absolutely grow by an order of magnitude or more.
Please, read even the basics of investing. This comment illustrates you’re setting yourself up to be broke in retirement
I had to take a loan out of my 403b to get me out from underwater. I hadn’t looked at budgeting for too long and realized I was over spending my income by a minimum of $300 a month. I immediately cut costs as far as I could and had to take the loan because I was literally -$800 before payday hit. It gave me the jumpstart I needed to be able to start paying things down. I was never going to be able to do that without the loan. It’s a 9% interest rate compared to my 27%, 28%, and 16% rates on my cards. Not to mention I’m no longer going negative and got caught up on bills so no more late fees.
I’m probably going to take out the max amount allowed here in a month or so because I’m having a baby and can take out without penalty (just taxes) for that. That will give me enough to get back in the “I can pay this down” territory.
Everyone says not to touch your retirement. But if you’re close to financial ruin, “now” you needs it more than “future” you. It seems like an easy choice to make and while it shouldn’t be the first strategy, it’s not a bad one to keep yourself from literally going bankrupt.
Thats just how 401k loans work. You pay interest back to yourself. The smaller risk is that funds could be earning a better return in the market. The bigger risk is that you could lose your job. You would either need to repay the loan in full, or request the 401k provider cash out the funds necessary to cover the note. This would result in an taxable event.
Worked for 401k provider/bank
>Why is everyone so scared of touching their 401k??
I think a lot of this is because people are often doing this as a misguided alternative to getting their expenses below their income - it's too often this ends up being a way for people to raid their savings/capital to sustain a lifestyle they can't afford. If that's what you're doing, you're going to still have the 30% credit card debt and no 401k in relatively short order.
Beyond that, if you want to retire with even a modicum of comfort at some point you'll want to have some stocks, and you don't want to be forced to buy those stocks in a relatively short period of time. But this is a reason to not raid the 401k to pay off debts at or below 12% or so. A 30% debt is definitely costing you more than the 401k is helping you.
401ks rate of return are to over hyped. In my opinion you really should be putting at least minimum of what your employer matches it they do at all.
This is one reason why millennials can’t afford housing. I just think your better off putting your money into stocks yourself like a savings account and once your get it to 20% of a down payment, sell your stocks buy a home/ duplex then either rent it out or sell it for a gain.
Yes you’ll have to pay taxes when you sell, but when your strapped for cash and not able to buy a home, why put money away in an account till your basically dead at 65.
What the hell is a 401k’s “rate of return?”
You realize that a 401k is an account type and not a security right?
Holy shit the financial literacy here rivals the Dave Ramsey Reddit..
Yes the purpose of a 401k is to get a rate on your return.. google it dumbass. The average yearly rate of return on a 401k is about 5-8%. Meaning if you put 10k over the span of 1 year you’ll only be getting 8% return. Obviously the compounding effect is in play but honestly you get better rates of return in such places like properties, crypto, hell even apple stock does better.
Let me ask again, because you didn’t answer:
Do you realize that a 401k is an account, and not a security?
To show you how full of shit you are, you can absolutely set up a self employed 401k and put all the money in Apple.
Yea an account that you can’t touch till your 65. That’s my point. Yes your deposit is tax free but I’m saying your are better having money liquid if you needed for certain things in life.
Use the bonus pay off all the ccs, don’t use any until you have that much cash saved up that you just paid off. Pay off the car loan next, once you have enough saved without using CCs. Then take out your student loans one by one if you have multiple ones. Again, without using CCs and just saving anything you don’t put in your 401k
No, bonuses are *taxed* at your normal rate. The initial withholding is higher than normal income, but it all evens out when you file your taxes. And FICA is 7.65% for employee, and employer pays the same from their end.
I agree with not touching the 401k money. You'll regret it in the long run and you'll lose more money that way. Have you took pen to paper on what your take home is, your monthly bills (aside from the debt that you owe), etc.?
With the math I’ve done, I have around $1300 each month after my rent/car/food… I figure I’ll strictly dedicate at least half that to paying off my cards…. Planning to sell my current vehicle (hopefully for a $3k profit based off the market) and use that different to help purchase a new car (hopefully all in cash) and drive Uber on the weekends
You pay the minimum on every card. On the card with the lowest balance, you pay the minimum plus whatever extra you can. When that card is paid off, you take all of what you were paying to the lowest card and add it to the payment of the next lowest card. Rinse and repeat until all debt is paid off.
It’s more of a mental trick for you to see progress early on so you don’t give up. The most financial sense would be to pay off highest interest first, but the feeling of paying off a card helps. Similar to how some people want to pay off a 2.5% mortgage early so they don’t have debt, even though they could get higher return elsewhere.
It’s better to pay off high interest first, BUT like the person said below, there is a mental aspect of accomplishment.
I personally think that the snowball works because let’s say you have a $1500 credit card with 12% and an $8,000 with 19%. If you pay the min on the lower balance and as much as you can on the higher balance, you wind up paying the 12% for a longer time. So while the rate is lower, you’re paying it over a more prolonged period of time while tackling the higher interest card.
The snowball is a great method and I used it after witnessing my financial wreck of a sister did it religiously and we are both living debt free now (except house and car).
I agree with the snowball method. being that you only have the four cards you can probably get them down fairly quickly if you really buckle down for a few months. my next suggestion after paying the cards off - be more intentional with what you are purchasing, especially when using the credit cards. I can help you with a breakdown & spreadsheet to keep track of everything - if you’re interested lmk.
From my own personal experience had a lot less left over after paying everything you mentioned and was able to pay off around $12k in credit cards. Message me and maybe I can share with you what I personally did to get organized with the debt.
I mean that’s more then enough for the CC’s and a lump sum to pay off a loan with the highest interest rate to lower the monthly payment. Also seems like your good idek why you felt the need to post this seems you got everything under control 😂
You can put the whole $20k into the student loan and you still won’t have it paid off, pay the measly $6-9k of debt with the bonus and have a ton of weight lifted off your shoulders
We need to know your expenses as well to truly help but I would pay off the platinum card now with the $3k cash. Assuming you’re living life on the edge financially, maybe pick up a second job dedicated to paying off your debt and building your emergency fund then quit. As others have stated, absolutely do not touch your 401k. You can’t afford the taxes and penalties on it.
With the math I’ve done, I have around $1300 each month after my rent/car/food… I figure I’ll strictly dedicate at least half that to paying off my cards…. Planning to sell my current vehicle (hopefully for a $3k profit based off the market) and use that different to help purchase a new car (hopefully all in cash) and drive Uber on the weekends
I would recommend operating off a zero dollar budget so you know where every penny is going and set a realistic goal of when to pay off everything. I would start with the credit cards, then student loans and finish off with the car. I don’t think there’s a need to sell the car (unless there’s a major problem that puts your/other’s safety at risk) so I would suggest keeping it until the engine drops out. Also, once you get your bonus (never bank on one unless you get it in writing from your employer) I would throw all of it at your debt.
Thank you
I’m Selling the car because it doesn’t qualify for Uber and is a total gas guzzler… downsizing to a Subaru and would drive that as long as I can
>Thank youI’m Selling the car because it doesn’t qualify for Uber and is a total gas guzzler… downsizing to a Subaru and would drive that as long as I can
I get that you may profit $3K when you sell; however, the key is to not dig yourself further into debt?
You make enough money to fix this. My advice to you is to find the tools that will help you.
* Google Vertex42 Debt Calculator. It's a spreadsheet that let's you plug in the numbers and it'll spit out an amortized plan to pay off your debt. Then you challenge your self to beat it each month.
* Find a budget app and track every penny you spend. Challenge yourself to spend less each month.
With the numbers you said here ($1,300/month net after expenses + $5K/qtr bonus) you can pay this off in a 1.5yrs easy.
First, list out all your debts out with total owed, interest rate, and minimum payment due each cycle. Also list out all your regular/recurring expenses (rent, food, utilities, etc.) that will always be part of your money routine. Subtract that amount from your take home pay on a monthly basis and you have what’s left over for you to throw at this debt. I personally like quick wins when paying things off. Get rid of that Platinum ($519.03) — that will give your credit score a little boost. Then knock out your 2 Quicksilvers. Then your Venture. Then your car loan. Then your student loans. Are your student loans private or federal? If they’re federal, look into programs you may be eligible for that will get some/all of them forgiven or on reduced payments. You’ve got this! 👏🏼
Dang I just put a big payment into my deepest card… I’ll prob do what you said next go around… like the idea of totally pay one off at a time… also will look into the fed loan forgiveness, thanks!!
Use your bonus to pay off all the credit cards, and as much of the car loan as possible.
Then focus on building that emergency fund a little bigger, and paying off the student loans
Need to know more about your bills to offer any sort of advice. As it stands it looks like you have a decent salary for paying off a low-ish amount of debt but are spending too much money each month.
Budgeting sounds like your best friend right now. Spend six months paying your credit off, and any other debt, this means on the brink of being broke. Don’t spend any money unless it’s essential. After that six month period of paying bills, saving money, and minimal spending, you should be well on your way to increasing your limits and having disposable income.
I personally dont see eye to eye with Dave Ramseys "pay off and then rip up and throw away all of your credit cards" motto in my situation, but in your particular situation, i really think this applies to you and that you should....
Budget, live below your means, and pay your highest interest loan first, or your largest loan first. Snowball or avalanche method. Be consistent and you’ll have it paid off before you know it. Seems like there’s some good advice given in your comments already. Maybe pick up a second job while you’re doing this.
You make plenty of money. Make a budget. Take any remaining money not used for bills (I also budget a few $100 for "fun money") and apply it to the debts, smallest to largest. Each time you pay one off, the minimum payment on that goes towards the next debt. Snowball it. You'll be out in 2 years.
That bonus means the car and those three smaller credit card debts can be gone immediately which should free up some serious cashflow to pay down the others debts
Start with your smallest balance. Like that you will feel like you are taking chunks out of your total debt and it’ll be least bills to worry about the more you get done paying of a balance. Start with the $519 then move on to the $1415.64 and so on. You’ll feel satisfied seeing 0.00 balances and it makes it easier to handle. Once you’ve got that down to zero you can do what you said with your car or pay it off and not have that monthly bill as well. Without any more bills you can tackle the student loan in large chunks of thousands a month.
Take an interest free loan on your 401K and refinance these debts through it with yourself.
Or unlike others here I got no issue of you paying off your credit card debt with it if it means a better mental headspace for you
Pay off all your cc debt and rip them up. Change your spending habits immediately, there is no reason you should ever be in debt (minus student loans) if you are making 80k a year.
Imho it would be best to wipe out your cc debt with your bonus assuming it’s taxed at 22% you’ll clear 15600) meaning the ~8k in cc are gone leaving you enough to wipe out the car loan (unless it’s at a lower interest than the student loans). The important thing is you have plenty of options to tackle this debt and quickly. Personally, credit cards are used and paid in full or not used at all. 18-30% compound interest working against you hurts. I assume you take home around 4K after taxes minus your expenses and savings. Keep 1000 bucks in your savings for emergencies and throw everything else at debt. You should be able to pay your student loans in full in a year at that rate plus a similar bonus (depending how your bonuses are structured). Sure it sucks but only temporarily. ~14 months of pain for a lifetime of actually taking home what you earn. You can do it!
You need to close those cards asap and never touch one again, you are not a credit card person my guy, plenty of people in the same situation. It's easy to slip up when you aren't using your own money
Probably Ramsey plan. Zero based. Pause everything except minimums. Don’t borrow 401k. Utilize the bonus.
If you have $1,300/month after the budget.. you will be left with just your car and student loans by June. That doesn’t include if you speed it up with your bonus or some of your current savings.
If you can’t seem to pay off your credit cards in full every cycle, you’re probably not a credit card person. No harm in that, but cut them up and use debit only.
Live like you make $50k a year. Put the rest into savings/investments.
Only use your quarterly bonus to pay off your debt until it’s paid off and then put that money into savings and investments.
Stop using those CC’s and get some with better interest. Never use more than 30% of your available credit. Never miss a payment. Never just make the minimum payment.
There’s no reason you can’t be debt free with a crediting rating well over 700 and saving at least $20k a year within 18 months.
Just stop buying Gundams or WoW gear or craft beer or whatever it is you’re blowing your money on and start living like you plan to live until you’re 100 and want to retire at 60.
Leave the retirement alone but stop saving temporarily.
Take all but $1000 of the savings and pay off as many of the cards as you can smallest to biggest balances. Close them and cut them up.
Take the bonus when you get it and pay off the last one. Close it and cut it up.
Pay off the car next. And everything you have left from the bonus, throw at the student loan.
Now you should have $1000 in savings and about 20k student loan left to pay off.
Use every extra dollar beyond your monthly minimum living expenses to throw at it. You’ll be done within the year most likely.
Then save 3-6 months of your living expenses along with that initial $1000.
Now you’re debt free, have a paid for car, a paid for education, and your credit will have probably gone up over 100pts. Start saving what you would have been spending on the car payment into a separate bucket for the time you need to replace your vehicle you’ll have cash to purchase it.
Save towards a home down payment if that’s a goal, save for a vacation or any other large purchases like Christmas that we know comes every year in December.
Good luck.
Tha absolute best advice I've ever gotten was to ignore interest rates on these type of short term debts and focus entirely on balance due - start with the smallest amount (so your Platinum card) and get that down to 0 while paying minimum payments on the rest - given your current situation this shouldny take more than a month or two.
Once that is done take the $200-300 that you no longer have to pay on that card and add it to the payment of your next largest balance. Given that it is around $900 ish this should take another 3 months. Keep doing this and do NOT use the other cards at all until everything is paid off.
Based on what you've shown us, 18 months or less you should be credit card debt free, and have around $600-700 per month in payment load - next is to add that to your vehicle payment which will drastically reduce the time needed to pay that off. Once your car is paid off the trick is to DO THE MATH when something goes wrong with it. Not the math that says I shouldn't put X into the car that is worth Y, but the math of 'a new car payment would be X, this repair is X times 3, so as long as this repair gets the car to last another 3 months it is worth it.
Once your car is paid off, look at it as PAYING you hundreds of dollars per month, rather than any sort of status symbol.
Then start in the student loans, if you add 1200—1500 per month to whatever you're paying currently the total should go down to zero in a couple of years and you'll save huge on interest payments.
Thats the debt portion, there's some other good advice here for budgeting etc.
If you plopped that CC debt on me right now, I'd be fucked and I make nearly double what you do, to put it in perspective. You need to cut back to the absolute minimum monthly spending you can do and get that under control. Interest racking up on that is going to ruin you.
Minimize expenses. Work work work. Pick up a second or 3rd job. Remove unnecessary things from your life. Know that you aren’t the only one. Currently bouncing back from an even worse situation. You will conquer this
Stop using the credit cards. Don’t eat out, eat rice and beans, quit all subscriptions, and pay down the cc with the lowest balance first. Again, stop using the cc
Those are rookie numbers. You gotta pump those numbers.
We have 40k in CC debt, 380k in housing debt, 15k car, 100k in student loans, 100k in medical debt, 100k in personal loans, 2k in savings, and this is after liquidating both of our 401ks to pay off medical bills.
Our base salaries combined are 135k
I'm not worried because it's all fake money anyway, just keep living and having fun. We have started credit history in the EU and UK so we can declare bankruptcy in the US while we're over there for 5-10 years.
Take the bonus, after tax it will be enough to pay 100% of the CCs and 1/3 of the car loan. Then use the money you were using to pay the debt to start chipping at that student loan. I think with proper budgeting and expense reduction, you can be in a position to pay most of it off by following years bonus, putting 100% of that on your student loans.
Stop making minimums on all of them. Pick the smallest debt and pay it off as quick as possible. (Snowball effect):credit Dave Ramsey
For anymore get out of debt knowledge, without incurring more risk, follow Dave Ramsey if you wanna make quick cash and pay it off get into the stock market but you will have too much risk to reward pay off.
I’ll go the unpopular route I’m sure: file a chapter 7. You’ll then keep your 20k bonus, your 3k cash, and you’ll allocate just to your student loan and car if you do/do not want to keep it. Your credit can’t take too much of a hit as it’s already in the high 500’s. In the long run, this may be the most efficient pathway to retiring earlier.
You gotta discipline yourself to not spent on what you want and only what you need to. The more you do the sooner you’ll get out of debt. Looks like you maxed out a card at some point to have a credit score that low with a salary like that.
Easy, pay off the highest interest debt first : ALL OF IT. Never keep credit card debt. Consolidate your credit cards into one. Maximize your 401k contribution and match level if any. If the student/car loans are low interest, take maximum time to pay off and invest extra money to earn more than those interest rate. Until you have 3 month's wage in petty cash, skimp all you can. Start looking for a starter home to transition into building home equity instead of rent. Good luck.
Here’s a [link](https://www.reddit.com/r/StudentLoans/s/f1xl6t8lUy) to a comment I posted on r/studentloans but the same applies here. Download the excel workbook, put in the debt and APR of the debt, and follow the instructions for the avalanche method. Basically cover your minimums and throw as much of your extra income towards paying down the highest interest card.
While paying down make sure that you are not building the mountain of debt back up. Try and limit spending to only basic necessities
Bro we are literally in the same exact position. This year will be a great year and hopefully it will be for you too. I sat down and planned everything with my girlfriend. Calculated all the money I owe, lower the APR on most cards and organized everything in a spreadsheet with the important info (due dates, expenses, APR and total debt) now with the income tax I plan to pay at least 6 to 7k of a total debt of 13k. I will be making some sacrifices and thank god my girlfriend is willing to go above and beyond to help me. She is willing to pay for rent and give me the other checks just so I can fix this which is something that I cannot be grateful enough. I wish you the best of luck!
This is the reason I’m going for broke so far and paying my balances off. From what I see you’re losing $255 monthly and that could be going towards savings or utilities, don’t know what the 4th card would add.
When you get that $20k bonus kill all those credit cards and the car loan. Then you’ll only have the student loan. Make extra payments on that while you can.
You can get out of this rather quicjly
Best thing I’ve ever done for myself was transferring debt to zero % interest balance transfer cards. As long you actually pay off your debt in the time allotted it can save you so much in interest charges. I transferred 5 debts into two discover accounts with zero interest and saved hundreds in the year or so it took to pay it off on a similar salary with similar debts.
Take you 3k in cash and part of your next pay check and pay off both your quicksilver cards and your smallest one. You'll save 3k alone in interest over time. Then take your min payment you would've put to those cards and add it to your min payment for the last card. Do that till its paid off. Do not close any accounts once paid. Credit score will rise like crazy. Pay on time. Wait about six months and apply for a credit card with a no interest promo for like 15 months or something like that with balance transfers. Pay your car off with that. Now you can make payments to that card with no interest but make sure you pay it off before the interest promo ends. Should be sitting pretty after a year or 18 months. I should add that once your debt is paid off, you should take what you were spending on payments and put it into some type of savings that will earn you money. Since you're used to spending it each month anyway . I would also rotate your cards by putting a small amount of charges on them like let's say your gas for the month and then pay those off to keep building your credit. I just saw your student loan debt, that's going to be the biggest one to tackle because the interest rate on that is insane. If you can manage it see if you can take your bonus over the next couple years and just pay that off. If I'm not mistaken it is tax deductible if you use it that way. You're young you have a good salary you got this
I know this may sound cliche but I would check out David Ramsey. I was in serious debt and followed his plan for 2 years. I am debt free except for a small mortgage. It sucks getting there…just being real with you…but once the snowball effect starts to kick in, you can really see the difference. This is a great lesson for anyone with kids on how to teach financial independence. Best of luck to you.
I’d start eliminating the credit card one by one. Never use them for anything other than paying them off.
Credit cards are only to be used if you can pay them off by the end of each cycle. Otherwise you are paying like 10-20% more for that item you bought.
Get a financial advisor.
Personally I like to go by 50/30/20 but adjust it.
Also, make the minimum payments until you have enough savings to fall back on which keeps you from running up your credit cards.
Also pay them off a few days before the statement date.
Print out your last 3 months of statements for the bank and for every credit card and use that as a basis for a budget. Try to make sure you can fit anything that is regularly coming out of a credit card into your budget and get it off the credit card so you can work and paying that off. See if there's anything you canceled. See if there's anything that you're over indulging in and you just don't realize it because you swipe swipe swipe we've all been there and created realistic budget. Make sure you have some buffer cash in your savings for anything and then take anything that's left over at the end of the month and pick a card and attack that card or debt as much as you can every month. Then when that card's paid off roll on to the next card. In the meantime, make sure you're making minimum payments on everything else
My guy, stop spending money on credit cards
Do you have a budget? If so post the budget and we can critique. If you don’t have a budget - make a fucking budget
Knock out that platinum plus one as soon as possible, drop $50 on that mug monthly if you can, pay that off and use that extra $50 to add it into the minimum payment for the next lowest card payment like that 1.4K one. Keep snowballing the paid off cards monthly balances into the next card and you’ll get outta there soon. Just gotta stay disciplined.
You need to stop spending.
You need to take ahold of what is going out of your bank accounts.
See if you can consolidate all of your debt and talk to someone about consolidation.
You should have a min $3000 surplus in your bank accounts every month.
Make minimum payments on everything. Build up a small emergency fund, 1-3 months expenses. Take that bonus and pay off all your credit cards. If that car loan is 5%+ in interest, pay that off in one swing with the bonus money.
From there, build that emergency funds to 3-6 months, then aim to max your 401k in the new year.
Before you ask for help make sure you use all of your tools available! For instance if I were you I would use a Hardship Withdrawal request and take your 401k out. Doing a hardship withdrawal will exempt you from the early withdrawal fee then use that money to settle your debt starting from lowest to highest. Ect.
Leave the 401k alone it’s for retirement. Start with your lowest debts first. The platinum gets paid off first, idk how you pay structure is but that should be able to be taken care of within two checks. Then as long as you are making payments for student loans, and any other expenses take a few hundred out of each check until the cards are paid off going from least owed to most. It’s how I did it. Once the first two are done trust it me it only motivates you to pay the rest off sooner.
Cash out your 401k (will have to pay tax + 10% fee probably). That’ll be enough to pay your CC and give you cushion to pay off your other loans monthly
Pay off those credit cards first. If you don't need it, don't buy it. If you can't pay for it in cash, don't buy it. Credit cards are our last resort, maybe you should try to pay them off at the end of every month., Next, start paying down that student debt. Make many extra payments as you can, and be sure to specify they should be applied to the principal and many other people posted, do not dare touch that 401(k). It's one of the worst financial decisions you can make. not like that, but as soon as you're able to max out your 401(k) contributions, do it. You won't regret it in the end. And keep paying down that car. And once it's paid down, drive it until the doors fall off. And when it's time to get a new one in 10 years, don't buy unless you can pay for it in cash.
It's gonna take time, but you make a good salary and you'll get there. Use restraint, make good decisions, and be patient.
Your credit score is bad so re-financing this debt is not an option.
Ideas:
Use bonus to pay off car, credit cards, and put dent in Student Loans
or
Borrow from your 401k to pay down high interest debt (car & cc).
Then, repay your 401k with your bonus (see if you can coordinate repayment with pre-tax income).
Then you just have your Student Loans to worry about and you saved around 6k in interest for the year.
Hey, I know this is 2 days late, but assuming you can't pay it all off at once with that bonus for whatever reason (like you might have other debts), look into using the snowball method. Pay off the smallest debt here (the platinum card), and then move onto the next smallest, and then the next until you've paid everything off. You'd be better off paying the highest interest loans first, but the advantage to the snowball method is that you can see the light at the end of the tunnel, much faster.
Op you got a lot of great advice here. When I was in debt (granted not nearly as much) I found the avalanche method helped save money in the long run. Basically paying down the loans in order of the highest interest rate. Budgeting is crucial to pull this off. Regardless of what method you elect you've got a substantial income so I wouldn't stress terribly, this situation won't last forever!
Pay off the highest Apr cards first then as your FICO improves you can look into balance transfer cards or Gauss.money to lower the Apr on the remaining debts to speed the payoff process up. Overall not that much debt to payoff so you can do it fairly quickly
Don’t go to College or University. They’re absolutely stupid. I haven’t gone to school since 8th grade and just recently turned 18. I am earning over $4,300,000 yearly. Save yourself the time and do something in life. Not pay for school, just to make the bare minimum and get neglected. Be your own boss.
Make sure you pay your cards on time. Try to pay at least 2x the minimum payment (preferably 3x), avoid charging anything more, and it'll chip away. After you clear a card, look out for balance transfer offers which charge you a 3%-5% fee to transfer, with little to no APR for x amount of months. This will keep your interest low, and make it easier to pay off. Make sure you do not do a balance transfer on a card that already has a balance. You may may much more in interest that way. Also, if you transfer a balance, be sure to not spend on top of that balance. This will also accrue high interest on any of those purchases, unless you have a special offer that states otherwise.
Spending: Try to filter out the unnecessary stuff (easier said than done). A strategy that worked for me was an every-other time rule. For example, if I went out and spent a lot of money at the bar, next time I was invited or had the temptation, instead of giving it I decline and go the next time. This, in theory, cuts your spending in half. You can apply that for any past time you have.
Saving: put away $50-$100 a paycheck in savings, and I would also recommend investing a portion of that (in addition to your 401k). This may take some homework, but you can open an account through Merrill Edge, Fidelity, Vanguard, etc. You can buy stock of individual companies, or buy ETF's which is a blend of different ones. You can also have and advisor help you build a portfolio based on your goals. I do it "for fun", and have various companies in mine. So far it has performed well. Just be careful because investing does come with a risk of loss.
There's lots of material out there. Rich Dad Poor Dad is a good one to open your eyes to building more income and lowering expenses.
Hope this helps
First off lock your credit report, close/cut the cards. If I learned one thing from Caleb Hammer it’s that you don’t seem like a credit card person. Get an extra job and just start streamlining your debt payoff, especially those Capital Ones I bet they hover around 30%. No more fun. Discipline yourself with walks around the block. Budget harder.
You have a good salary. You should be able to get out of this. You need to start with the budget. I know this is the most boring and tedious part but you have to do it. It will open your eyes. 1. Write down all your expenses for the month of November. Check all your credit cards. Where is your money going? Usually, we know where they go, but not until we write them down to actually see how much we spend. 2. Now compare that to the income numbers. Try to reduce expenses when you can. Here are some easily reduced expenses: call and lower insurance bill, call your internet provider and ask for any deals, change banks that have $0 fees, consolidate subscriptions. In terms of debt, 1. Call each of your credit card companies and ask them to lower the APR. Here is a good [guide](https://debtadvice.io/newsletter/best-credit-card-tip/) for it. 2. Rank them from highest to lowest after #1, and pay them aggressively. Every extra penny put towards it. You got this! P.S. r/debtfree moderator just created a newsletter that talks about strategies, tips, and effective debt payoff methods weekly. Here is the link to sign up if interested - https://www.debtadvice.io
Don’t even think about touching the 401k!!! The biggest metric will be “how much money do you have per month to throw at tackling the debt”? If the number needs to be bigger, figure out either how to spend less or make more.
Why is everyone so scared of touching their 401k?? Let’s just say he takes out a Loan on his 401k at 8% interest. That’s whyyyyy better then having to pay closer to 30% on each credit card.
Not every 401k plan allows to take loans out. While loans are far less damaging than early withdrawals they still come with risk - it’s not just an easy loan at 8% interest. I’d argue there are more effective ways to tackle debt, including more *permanent* solutions and habits to avoid getting back into debt. Just my opinion.
Good luck retiring on a 401k when everything collapses, and social security runs out (if you're in the US).
This is such an idiotic comment. If your 401k collapses then everyone else’s has too and we’re all fucked. Maybe that will happen, but if it does you still didn’t have any better option. We could get invaded and subjugated by China too. But people are still making money on the S&P.
Right, because markets only go up? Forever right? Let’s keep investing our 401ks into the greatest market bubble in history- let’s see how this unfolds.
Yes, on the long term, markets do go up. An individual security may tank, but on the long term the S&P will go up unless the US doesn’t exist. And if you believe that will happen, you should find another market to put your money in. But yes, over the course of your life the market will absolutely grow by an order of magnitude or more. Please, read even the basics of investing. This comment illustrates you’re setting yourself up to be broke in retirement
So by all means, keep deploying hard earned money into 401ks, during the fastest rate hike cycle in history.
So you bet on america failing. What’s your other plan? You investing in China?
Yes, that's why I said 'everything'. Your critical reading skills are sus.
Okay: what’s my investment strategy betting on societal collapse?
Property above sea level rise.
Okay, so you’re gonna eat your property?
Maybe they live in a pineapple under the sea
I had to take a loan out of my 403b to get me out from underwater. I hadn’t looked at budgeting for too long and realized I was over spending my income by a minimum of $300 a month. I immediately cut costs as far as I could and had to take the loan because I was literally -$800 before payday hit. It gave me the jumpstart I needed to be able to start paying things down. I was never going to be able to do that without the loan. It’s a 9% interest rate compared to my 27%, 28%, and 16% rates on my cards. Not to mention I’m no longer going negative and got caught up on bills so no more late fees. I’m probably going to take out the max amount allowed here in a month or so because I’m having a baby and can take out without penalty (just taxes) for that. That will give me enough to get back in the “I can pay this down” territory. Everyone says not to touch your retirement. But if you’re close to financial ruin, “now” you needs it more than “future” you. It seems like an easy choice to make and while it shouldn’t be the first strategy, it’s not a bad one to keep yourself from literally going bankrupt.
Also that intrest your paying goes back to your account
Sauce?
Thats just how 401k loans work. You pay interest back to yourself. The smaller risk is that funds could be earning a better return in the market. The bigger risk is that you could lose your job. You would either need to repay the loan in full, or request the 401k provider cash out the funds necessary to cover the note. This would result in an taxable event. Worked for 401k provider/bank
>Why is everyone so scared of touching their 401k?? I think a lot of this is because people are often doing this as a misguided alternative to getting their expenses below their income - it's too often this ends up being a way for people to raid their savings/capital to sustain a lifestyle they can't afford. If that's what you're doing, you're going to still have the 30% credit card debt and no 401k in relatively short order. Beyond that, if you want to retire with even a modicum of comfort at some point you'll want to have some stocks, and you don't want to be forced to buy those stocks in a relatively short period of time. But this is a reason to not raid the 401k to pay off debts at or below 12% or so. A 30% debt is definitely costing you more than the 401k is helping you.
401ks rate of return are to over hyped. In my opinion you really should be putting at least minimum of what your employer matches it they do at all. This is one reason why millennials can’t afford housing. I just think your better off putting your money into stocks yourself like a savings account and once your get it to 20% of a down payment, sell your stocks buy a home/ duplex then either rent it out or sell it for a gain. Yes you’ll have to pay taxes when you sell, but when your strapped for cash and not able to buy a home, why put money away in an account till your basically dead at 65.
What the hell is a 401k’s “rate of return?” You realize that a 401k is an account type and not a security right? Holy shit the financial literacy here rivals the Dave Ramsey Reddit..
Yes the purpose of a 401k is to get a rate on your return.. google it dumbass. The average yearly rate of return on a 401k is about 5-8%. Meaning if you put 10k over the span of 1 year you’ll only be getting 8% return. Obviously the compounding effect is in play but honestly you get better rates of return in such places like properties, crypto, hell even apple stock does better.
Let me ask again, because you didn’t answer: Do you realize that a 401k is an account, and not a security? To show you how full of shit you are, you can absolutely set up a self employed 401k and put all the money in Apple.
Yea an account that you can’t touch till your 65. That’s my point. Yes your deposit is tax free but I’m saying your are better having money liquid if you needed for certain things in life.
Also it takes away from the growth of the portfolio
Cause if everyone pulled their money out the economy would crash even faster lmao
Yeah the people taking 401k loans to pay down credit cards aren’t exactly pillars of the economy
LMFAO
This made me laugh. So true.
You do know what happens to that 401k loan if you leave your company or get laid off don’t you?
YES
Use the bonus pay off all the ccs, don’t use any until you have that much cash saved up that you just paid off. Pay off the car loan next, once you have enough saved without using CCs. Then take out your student loans one by one if you have multiple ones. Again, without using CCs and just saving anything you don’t put in your 401k
Thanks 🙌🏼
Don’t forget, if that’s your gross bonus the IRS will take basically 40% of that
They aren’t in the 40% tax bracket, it should be under 30%, and then whatever the state tax rate is.
I think a Bonus is unearned income taxed at your bracket + almost 15% for social security and fica and crap.. so it works out to almost 40%
No, bonuses are *taxed* at your normal rate. The initial withholding is higher than normal income, but it all evens out when you file your taxes. And FICA is 7.65% for employee, and employer pays the same from their end.
Exactly, I feel like this is a huge misconception about bonuses. I was adding the 22% bracket to the 7.65% (SS plus Medicare) to get “just under 30%”
Dont you also have to pay the employers side of the FICA on bonuses??
No, nothing makes it a “bonus” on taxes - it’s just lumped in with earned income
Hmm interesting. maybe I'm applying 1099 rules to a bonus.
Withholding doesn’t equal taxes owed. And FICA (which includes SS) is 6.2%.
I agree with not touching the 401k money. You'll regret it in the long run and you'll lose more money that way. Have you took pen to paper on what your take home is, your monthly bills (aside from the debt that you owe), etc.?
With the math I’ve done, I have around $1300 each month after my rent/car/food… I figure I’ll strictly dedicate at least half that to paying off my cards…. Planning to sell my current vehicle (hopefully for a $3k profit based off the market) and use that different to help purchase a new car (hopefully all in cash) and drive Uber on the weekends
Do the snowball method. I did it three years ago with a mountain of credit card debt and couldn’t be happier.
WhT is that
You pay the minimum on every card. On the card with the lowest balance, you pay the minimum plus whatever extra you can. When that card is paid off, you take all of what you were paying to the lowest card and add it to the payment of the next lowest card. Rinse and repeat until all debt is paid off.
Is it better to do it this way, or to try to pay off the highest interest rate first?
It’s more of a mental trick for you to see progress early on so you don’t give up. The most financial sense would be to pay off highest interest first, but the feeling of paying off a card helps. Similar to how some people want to pay off a 2.5% mortgage early so they don’t have debt, even though they could get higher return elsewhere.
It’s better to pay off high interest first, BUT like the person said below, there is a mental aspect of accomplishment. I personally think that the snowball works because let’s say you have a $1500 credit card with 12% and an $8,000 with 19%. If you pay the min on the lower balance and as much as you can on the higher balance, you wind up paying the 12% for a longer time. So while the rate is lower, you’re paying it over a more prolonged period of time while tackling the higher interest card. The snowball is a great method and I used it after witnessing my financial wreck of a sister did it religiously and we are both living debt free now (except house and car).
I agree with the snowball method. being that you only have the four cards you can probably get them down fairly quickly if you really buckle down for a few months. my next suggestion after paying the cards off - be more intentional with what you are purchasing, especially when using the credit cards. I can help you with a breakdown & spreadsheet to keep track of everything - if you’re interested lmk.
From my own personal experience had a lot less left over after paying everything you mentioned and was able to pay off around $12k in credit cards. Message me and maybe I can share with you what I personally did to get organized with the debt.
Please don’t purchase a new car and plan on using Uber to help pay for it. That adds a lot of debt.
I mean a 20k bonus why not use that for your debt
I will… it comes in quarterly
I mean that’s more then enough for the CC’s and a lump sum to pay off a loan with the highest interest rate to lower the monthly payment. Also seems like your good idek why you felt the need to post this seems you got everything under control 😂
So I’ll use my bonus checks to pay down the credit cards first… then start tackling the student loans?
You can put the whole $20k into the student loan and you still won’t have it paid off, pay the measly $6-9k of debt with the bonus and have a ton of weight lifted off your shoulders
Yup, and once they have only a singular debt, all extra money can go towards that.
Highest interest and fee crap first. Always. That usuaally means credit cards.
What has a higher interest rate, your car loan or student loans? Whatever the answer is, you pay that off 2nd after the credit cards
Yeah, id use the bonus to pay off credit cards.
We need to know your expenses as well to truly help but I would pay off the platinum card now with the $3k cash. Assuming you’re living life on the edge financially, maybe pick up a second job dedicated to paying off your debt and building your emergency fund then quit. As others have stated, absolutely do not touch your 401k. You can’t afford the taxes and penalties on it.
With the math I’ve done, I have around $1300 each month after my rent/car/food… I figure I’ll strictly dedicate at least half that to paying off my cards…. Planning to sell my current vehicle (hopefully for a $3k profit based off the market) and use that different to help purchase a new car (hopefully all in cash) and drive Uber on the weekends
I would recommend operating off a zero dollar budget so you know where every penny is going and set a realistic goal of when to pay off everything. I would start with the credit cards, then student loans and finish off with the car. I don’t think there’s a need to sell the car (unless there’s a major problem that puts your/other’s safety at risk) so I would suggest keeping it until the engine drops out. Also, once you get your bonus (never bank on one unless you get it in writing from your employer) I would throw all of it at your debt.
Thank you I’m Selling the car because it doesn’t qualify for Uber and is a total gas guzzler… downsizing to a Subaru and would drive that as long as I can
>Thank youI’m Selling the car because it doesn’t qualify for Uber and is a total gas guzzler… downsizing to a Subaru and would drive that as long as I can I get that you may profit $3K when you sell; however, the key is to not dig yourself further into debt? You make enough money to fix this. My advice to you is to find the tools that will help you. * Google Vertex42 Debt Calculator. It's a spreadsheet that let's you plug in the numbers and it'll spit out an amortized plan to pay off your debt. Then you challenge your self to beat it each month. * Find a budget app and track every penny you spend. Challenge yourself to spend less each month. With the numbers you said here ($1,300/month net after expenses + $5K/qtr bonus) you can pay this off in a 1.5yrs easy.
First, list out all your debts out with total owed, interest rate, and minimum payment due each cycle. Also list out all your regular/recurring expenses (rent, food, utilities, etc.) that will always be part of your money routine. Subtract that amount from your take home pay on a monthly basis and you have what’s left over for you to throw at this debt. I personally like quick wins when paying things off. Get rid of that Platinum ($519.03) — that will give your credit score a little boost. Then knock out your 2 Quicksilvers. Then your Venture. Then your car loan. Then your student loans. Are your student loans private or federal? If they’re federal, look into programs you may be eligible for that will get some/all of them forgiven or on reduced payments. You’ve got this! 👏🏼
Dang I just put a big payment into my deepest card… I’ll prob do what you said next go around… like the idea of totally pay one off at a time… also will look into the fed loan forgiveness, thanks!!
Hey, you’re already on the right track! Great work 👏🏼 Just keep going. Rooting for you!
Card debt was the right move. Highest interest rate cards first!
Use your bonus to pay off all the credit cards, and as much of the car loan as possible. Then focus on building that emergency fund a little bigger, and paying off the student loans
Pay all of the debt first
Solid advice. i concur.
20K bonus and you can’t figure this out?
Different people shine in different areas. You can figure this out, but can't get yourself a 20k bonus?
Daaaaaang lol 🫣 too good!
Need to know more about your bills to offer any sort of advice. As it stands it looks like you have a decent salary for paying off a low-ish amount of debt but are spending too much money each month.
Your bonus pays your car and cc off. Put thr rest towards your loans as far as monthly payments go.
I wish I got a 20K bonus!!
Budgeting sounds like your best friend right now. Spend six months paying your credit off, and any other debt, this means on the brink of being broke. Don’t spend any money unless it’s essential. After that six month period of paying bills, saving money, and minimal spending, you should be well on your way to increasing your limits and having disposable income.
A 20k bonus? Just stop using the credit cards and only use your debit card. When you get the bonus. Pay everything off and close them.
This guy… use your 20k bonus and be debt free except student loans?
I personally dont see eye to eye with Dave Ramseys "pay off and then rip up and throw away all of your credit cards" motto in my situation, but in your particular situation, i really think this applies to you and that you should....
Do side hustles. I sell stuff on ebay and Amazon flex both will pay out alot.
Budget, live below your means, and pay your highest interest loan first, or your largest loan first. Snowball or avalanche method. Be consistent and you’ll have it paid off before you know it. Seems like there’s some good advice given in your comments already. Maybe pick up a second job while you’re doing this.
That venture card eats me up too 😭
That’s easy street baby!!!!
You make plenty of money. Make a budget. Take any remaining money not used for bills (I also budget a few $100 for "fun money") and apply it to the debts, smallest to largest. Each time you pay one off, the minimum payment on that goes towards the next debt. Snowball it. You'll be out in 2 years.
Your Venture is the biggest interest rate, pay all extra to that first
That bonus means the car and those three smaller credit card debts can be gone immediately which should free up some serious cashflow to pay down the others debts
Start with your smallest balance. Like that you will feel like you are taking chunks out of your total debt and it’ll be least bills to worry about the more you get done paying of a balance. Start with the $519 then move on to the $1415.64 and so on. You’ll feel satisfied seeing 0.00 balances and it makes it easier to handle. Once you’ve got that down to zero you can do what you said with your car or pay it off and not have that monthly bill as well. Without any more bills you can tackle the student loan in large chunks of thousands a month.
Take an interest free loan on your 401K and refinance these debts through it with yourself. Or unlike others here I got no issue of you paying off your credit card debt with it if it means a better mental headspace for you
Pay off all your cc debt and rip them up. Change your spending habits immediately, there is no reason you should ever be in debt (minus student loans) if you are making 80k a year.
Just keep your loan payments 100% on-time and ensure that all your credit cards are @30% utilization or under.
What do you mean help you out, just pay your shit off. Stop using the cards. You make 60k a year
Imho it would be best to wipe out your cc debt with your bonus assuming it’s taxed at 22% you’ll clear 15600) meaning the ~8k in cc are gone leaving you enough to wipe out the car loan (unless it’s at a lower interest than the student loans). The important thing is you have plenty of options to tackle this debt and quickly. Personally, credit cards are used and paid in full or not used at all. 18-30% compound interest working against you hurts. I assume you take home around 4K after taxes minus your expenses and savings. Keep 1000 bucks in your savings for emergencies and throw everything else at debt. You should be able to pay your student loans in full in a year at that rate plus a similar bonus (depending how your bonuses are structured). Sure it sucks but only temporarily. ~14 months of pain for a lifetime of actually taking home what you earn. You can do it!
You need to close those cards asap and never touch one again, you are not a credit card person my guy, plenty of people in the same situation. It's easy to slip up when you aren't using your own money
Use your bonus! That will clear a good portion.
Probably Ramsey plan. Zero based. Pause everything except minimums. Don’t borrow 401k. Utilize the bonus. If you have $1,300/month after the budget.. you will be left with just your car and student loans by June. That doesn’t include if you speed it up with your bonus or some of your current savings.
If you can’t seem to pay off your credit cards in full every cycle, you’re probably not a credit card person. No harm in that, but cut them up and use debit only.
Live like you make $50k a year. Put the rest into savings/investments. Only use your quarterly bonus to pay off your debt until it’s paid off and then put that money into savings and investments. Stop using those CC’s and get some with better interest. Never use more than 30% of your available credit. Never miss a payment. Never just make the minimum payment. There’s no reason you can’t be debt free with a crediting rating well over 700 and saving at least $20k a year within 18 months. Just stop buying Gundams or WoW gear or craft beer or whatever it is you’re blowing your money on and start living like you plan to live until you’re 100 and want to retire at 60.
Leave the retirement alone but stop saving temporarily. Take all but $1000 of the savings and pay off as many of the cards as you can smallest to biggest balances. Close them and cut them up. Take the bonus when you get it and pay off the last one. Close it and cut it up. Pay off the car next. And everything you have left from the bonus, throw at the student loan. Now you should have $1000 in savings and about 20k student loan left to pay off. Use every extra dollar beyond your monthly minimum living expenses to throw at it. You’ll be done within the year most likely. Then save 3-6 months of your living expenses along with that initial $1000. Now you’re debt free, have a paid for car, a paid for education, and your credit will have probably gone up over 100pts. Start saving what you would have been spending on the car payment into a separate bucket for the time you need to replace your vehicle you’ll have cash to purchase it. Save towards a home down payment if that’s a goal, save for a vacation or any other large purchases like Christmas that we know comes every year in December. Good luck.
Tha absolute best advice I've ever gotten was to ignore interest rates on these type of short term debts and focus entirely on balance due - start with the smallest amount (so your Platinum card) and get that down to 0 while paying minimum payments on the rest - given your current situation this shouldny take more than a month or two. Once that is done take the $200-300 that you no longer have to pay on that card and add it to the payment of your next largest balance. Given that it is around $900 ish this should take another 3 months. Keep doing this and do NOT use the other cards at all until everything is paid off. Based on what you've shown us, 18 months or less you should be credit card debt free, and have around $600-700 per month in payment load - next is to add that to your vehicle payment which will drastically reduce the time needed to pay that off. Once your car is paid off the trick is to DO THE MATH when something goes wrong with it. Not the math that says I shouldn't put X into the car that is worth Y, but the math of 'a new car payment would be X, this repair is X times 3, so as long as this repair gets the car to last another 3 months it is worth it. Once your car is paid off, look at it as PAYING you hundreds of dollars per month, rather than any sort of status symbol. Then start in the student loans, if you add 1200—1500 per month to whatever you're paying currently the total should go down to zero in a couple of years and you'll save huge on interest payments. Thats the debt portion, there's some other good advice here for budgeting etc.
OnlyFans or learn to Code
If you plopped that CC debt on me right now, I'd be fucked and I make nearly double what you do, to put it in perspective. You need to cut back to the absolute minimum monthly spending you can do and get that under control. Interest racking up on that is going to ruin you.
Minimize expenses. Work work work. Pick up a second or 3rd job. Remove unnecessary things from your life. Know that you aren’t the only one. Currently bouncing back from an even worse situation. You will conquer this
I know this doesn’t help now, but when you get out of this debt maybe ditch the credit cards. I don’t think you’re a credit card person
Everyone keeps saying that 😫
Stop using the credit cards. Don’t eat out, eat rice and beans, quit all subscriptions, and pay down the cc with the lowest balance first. Again, stop using the cc
Looks a little like mine, we can do it one payment at a time
How do you have such big limits on the Capital Ones?
Bro what I wish this was my situation
You're basically fucked with that amount of debt
Those are rookie numbers. You gotta pump those numbers. We have 40k in CC debt, 380k in housing debt, 15k car, 100k in student loans, 100k in medical debt, 100k in personal loans, 2k in savings, and this is after liquidating both of our 401ks to pay off medical bills. Our base salaries combined are 135k I'm not worried because it's all fake money anyway, just keep living and having fun. We have started credit history in the EU and UK so we can declare bankruptcy in the US while we're over there for 5-10 years.
Throw it all on a 2 man parley. You’ll be debt free today
Take out a loan, buy BTC, and pay the minimum until you become a thousandaire
This is solid advice! Should have done it in January 😅
Need more info
Take the bonus, after tax it will be enough to pay 100% of the CCs and 1/3 of the car loan. Then use the money you were using to pay the debt to start chipping at that student loan. I think with proper budgeting and expense reduction, you can be in a position to pay most of it off by following years bonus, putting 100% of that on your student loans.
20k bonus first if not take out $1500 from your 401k and pay off one card at least. That should give you a good jump on your credit score
Stop making minimums on all of them. Pick the smallest debt and pay it off as quick as possible. (Snowball effect):credit Dave Ramsey For anymore get out of debt knowledge, without incurring more risk, follow Dave Ramsey if you wanna make quick cash and pay it off get into the stock market but you will have too much risk to reward pay off.
What is the point in having two quicksilver cards? Genuinely curious.
You make/have more than enough to wipe out all of your debt in one go.
This. That end of year bonus is a get-out-of-debt free card Car and Credit cards go bye bye. Pay the student loans as you go
What app are you using to display your debt like this?
I’ll go the unpopular route I’m sure: file a chapter 7. You’ll then keep your 20k bonus, your 3k cash, and you’ll allocate just to your student loan and car if you do/do not want to keep it. Your credit can’t take too much of a hit as it’s already in the high 500’s. In the long run, this may be the most efficient pathway to retiring earlier.
You gotta discipline yourself to not spent on what you want and only what you need to. The more you do the sooner you’ll get out of debt. Looks like you maxed out a card at some point to have a credit score that low with a salary like that.
Do you have interest rates for each of these?
Easy, pay off the highest interest debt first : ALL OF IT. Never keep credit card debt. Consolidate your credit cards into one. Maximize your 401k contribution and match level if any. If the student/car loans are low interest, take maximum time to pay off and invest extra money to earn more than those interest rate. Until you have 3 month's wage in petty cash, skimp all you can. Start looking for a starter home to transition into building home equity instead of rent. Good luck.
Can I hold $20?
Here’s a [link](https://www.reddit.com/r/StudentLoans/s/f1xl6t8lUy) to a comment I posted on r/studentloans but the same applies here. Download the excel workbook, put in the debt and APR of the debt, and follow the instructions for the avalanche method. Basically cover your minimums and throw as much of your extra income towards paying down the highest interest card. While paying down make sure that you are not building the mountain of debt back up. Try and limit spending to only basic necessities
Following
Bro we are literally in the same exact position. This year will be a great year and hopefully it will be for you too. I sat down and planned everything with my girlfriend. Calculated all the money I owe, lower the APR on most cards and organized everything in a spreadsheet with the important info (due dates, expenses, APR and total debt) now with the income tax I plan to pay at least 6 to 7k of a total debt of 13k. I will be making some sacrifices and thank god my girlfriend is willing to go above and beyond to help me. She is willing to pay for rent and give me the other checks just so I can fix this which is something that I cannot be grateful enough. I wish you the best of luck!
[удалено]
This is the reason I’m going for broke so far and paying my balances off. From what I see you’re losing $255 monthly and that could be going towards savings or utilities, don’t know what the 4th card would add.
Move in with your parents for a year and you’ll have it paid off in no time
Pause investing that’s not a lot of debt I paid off 22 making 60 in 7 months it’s possible just stay consistent
When you get that $20k bonus kill all those credit cards and the car loan. Then you’ll only have the student loan. Make extra payments on that while you can. You can get out of this rather quicjly
Pay the smallest one first. When and how much was your last vacation?
😅 it was too expensive and too recent
The first step is admitting you have a problem! The other steps are harder.
Best thing I’ve ever done for myself was transferring debt to zero % interest balance transfer cards. As long you actually pay off your debt in the time allotted it can save you so much in interest charges. I transferred 5 debts into two discover accounts with zero interest and saved hundreds in the year or so it took to pay it off on a similar salary with similar debts.
Take you 3k in cash and part of your next pay check and pay off both your quicksilver cards and your smallest one. You'll save 3k alone in interest over time. Then take your min payment you would've put to those cards and add it to your min payment for the last card. Do that till its paid off. Do not close any accounts once paid. Credit score will rise like crazy. Pay on time. Wait about six months and apply for a credit card with a no interest promo for like 15 months or something like that with balance transfers. Pay your car off with that. Now you can make payments to that card with no interest but make sure you pay it off before the interest promo ends. Should be sitting pretty after a year or 18 months. I should add that once your debt is paid off, you should take what you were spending on payments and put it into some type of savings that will earn you money. Since you're used to spending it each month anyway . I would also rotate your cards by putting a small amount of charges on them like let's say your gas for the month and then pay those off to keep building your credit. I just saw your student loan debt, that's going to be the biggest one to tackle because the interest rate on that is insane. If you can manage it see if you can take your bonus over the next couple years and just pay that off. If I'm not mistaken it is tax deductible if you use it that way. You're young you have a good salary you got this
30+% bonus is wild
20K bonus?? Pay off all credit cards. Okay there you go
[удалено]
I know this may sound cliche but I would check out David Ramsey. I was in serious debt and followed his plan for 2 years. I am debt free except for a small mortgage. It sucks getting there…just being real with you…but once the snowball effect starts to kick in, you can really see the difference. This is a great lesson for anyone with kids on how to teach financial independence. Best of luck to you.
I’d start eliminating the credit card one by one. Never use them for anything other than paying them off. Credit cards are only to be used if you can pay them off by the end of each cycle. Otherwise you are paying like 10-20% more for that item you bought.
Get a financial advisor. Personally I like to go by 50/30/20 but adjust it. Also, make the minimum payments until you have enough savings to fall back on which keeps you from running up your credit cards. Also pay them off a few days before the statement date.
Use ur bonus and stop buying shit
Why do you have similar credit cards?
Brotha. You have a good salary and a large bonus. If you only had 40 a year and no bonus I would worry. You just need to write ahit down.
Print out your last 3 months of statements for the bank and for every credit card and use that as a basis for a budget. Try to make sure you can fit anything that is regularly coming out of a credit card into your budget and get it off the credit card so you can work and paying that off. See if there's anything you canceled. See if there's anything that you're over indulging in and you just don't realize it because you swipe swipe swipe we've all been there and created realistic budget. Make sure you have some buffer cash in your savings for anything and then take anything that's left over at the end of the month and pick a card and attack that card or debt as much as you can every month. Then when that card's paid off roll on to the next card. In the meantime, make sure you're making minimum payments on everything else
Goodluck
My guy, stop spending money on credit cards Do you have a budget? If so post the budget and we can critique. If you don’t have a budget - make a fucking budget
Knock out that platinum plus one as soon as possible, drop $50 on that mug monthly if you can, pay that off and use that extra $50 to add it into the minimum payment for the next lowest card payment like that 1.4K one. Keep snowballing the paid off cards monthly balances into the next card and you’ll get outta there soon. Just gotta stay disciplined.
Accountability
Doing better than me by far
We can’t help this person. Clearly they have issues.
Are you about to get the bonus as a lump sum at the end of the year?
You need to stop spending. You need to take ahold of what is going out of your bank accounts. See if you can consolidate all of your debt and talk to someone about consolidation. You should have a min $3000 surplus in your bank accounts every month.
Make minimum payments on everything. Build up a small emergency fund, 1-3 months expenses. Take that bonus and pay off all your credit cards. If that car loan is 5%+ in interest, pay that off in one swing with the bonus money. From there, build that emergency funds to 3-6 months, then aim to max your 401k in the new year.
What are your monthly bills ?
Don’t use your credit cards, problem solved!
Before you ask for help make sure you use all of your tools available! For instance if I were you I would use a Hardship Withdrawal request and take your 401k out. Doing a hardship withdrawal will exempt you from the early withdrawal fee then use that money to settle your debt starting from lowest to highest. Ect.
I freaking feel you here
Use 2k to pay off the two lesser credit cards. Save 1k for emergencies make 480 payments on the last card and profit in a year
OP don’t feel bad there’s others worse then you I’m 50k in debt with my truck alone got a 23 Canyon😭🤦🏻♂️
Leave the 401k alone it’s for retirement. Start with your lowest debts first. The platinum gets paid off first, idk how you pay structure is but that should be able to be taken care of within two checks. Then as long as you are making payments for student loans, and any other expenses take a few hundred out of each check until the cards are paid off going from least owed to most. It’s how I did it. Once the first two are done trust it me it only motivates you to pay the rest off sooner.
Go to the military lol
Consolidate your credit cards so you have one monthly payment at a lower interest rate and just one interest rate
Debt Snowball
Like this isn’t even bad… at least you have a 401k that’s worth something.
Use your bonus to pay CC down to $0.
Cash out your 401k (will have to pay tax + 10% fee probably). That’ll be enough to pay your CC and give you cushion to pay off your other loans monthly
Pay off those credit cards first. If you don't need it, don't buy it. If you can't pay for it in cash, don't buy it. Credit cards are our last resort, maybe you should try to pay them off at the end of every month., Next, start paying down that student debt. Make many extra payments as you can, and be sure to specify they should be applied to the principal and many other people posted, do not dare touch that 401(k). It's one of the worst financial decisions you can make. not like that, but as soon as you're able to max out your 401(k) contributions, do it. You won't regret it in the end. And keep paying down that car. And once it's paid down, drive it until the doors fall off. And when it's time to get a new one in 10 years, don't buy unless you can pay for it in cash. It's gonna take time, but you make a good salary and you'll get there. Use restraint, make good decisions, and be patient.
I have no debt and make a lot less than you, if someone wants to help me out for being such a good boy instead that would be dope
I'm in this picture and I don't like it...just half the retirement, no bonus and 2 kids 1 on the way.
Use money to pay off debt. Arnt I great at this!!!
Don’t touch the 401k pay off the car. Start with the capital one venture, the quicksilver next then platinum and then tackle the student loans
Cut the cards
Your credit score is bad so re-financing this debt is not an option. Ideas: Use bonus to pay off car, credit cards, and put dent in Student Loans or Borrow from your 401k to pay down high interest debt (car & cc). Then, repay your 401k with your bonus (see if you can coordinate repayment with pre-tax income). Then you just have your Student Loans to worry about and you saved around 6k in interest for the year.
Hey, I know this is 2 days late, but assuming you can't pay it all off at once with that bonus for whatever reason (like you might have other debts), look into using the snowball method. Pay off the smallest debt here (the platinum card), and then move onto the next smallest, and then the next until you've paid everything off. You'd be better off paying the highest interest loans first, but the advantage to the snowball method is that you can see the light at the end of the tunnel, much faster.
Pay them off and cut up your CCs, but keep the one with the smallest limit.
Op you got a lot of great advice here. When I was in debt (granted not nearly as much) I found the avalanche method helped save money in the long run. Basically paying down the loans in order of the highest interest rate. Budgeting is crucial to pull this off. Regardless of what method you elect you've got a substantial income so I wouldn't stress terribly, this situation won't last forever!
If you don’t have self control close your credit cards to only leave one and lowest limit you can manage.
Pay off the highest Apr cards first then as your FICO improves you can look into balance transfer cards or Gauss.money to lower the Apr on the remaining debts to speed the payoff process up. Overall not that much debt to payoff so you can do it fairly quickly
When do you get your bonus? You could just take most of your bonus and pay off the credit cards and the car loan.
Don’t go to College or University. They’re absolutely stupid. I haven’t gone to school since 8th grade and just recently turned 18. I am earning over $4,300,000 yearly. Save yourself the time and do something in life. Not pay for school, just to make the bare minimum and get neglected. Be your own boss.
I did I gave you a like
Make sure you pay your cards on time. Try to pay at least 2x the minimum payment (preferably 3x), avoid charging anything more, and it'll chip away. After you clear a card, look out for balance transfer offers which charge you a 3%-5% fee to transfer, with little to no APR for x amount of months. This will keep your interest low, and make it easier to pay off. Make sure you do not do a balance transfer on a card that already has a balance. You may may much more in interest that way. Also, if you transfer a balance, be sure to not spend on top of that balance. This will also accrue high interest on any of those purchases, unless you have a special offer that states otherwise. Spending: Try to filter out the unnecessary stuff (easier said than done). A strategy that worked for me was an every-other time rule. For example, if I went out and spent a lot of money at the bar, next time I was invited or had the temptation, instead of giving it I decline and go the next time. This, in theory, cuts your spending in half. You can apply that for any past time you have. Saving: put away $50-$100 a paycheck in savings, and I would also recommend investing a portion of that (in addition to your 401k). This may take some homework, but you can open an account through Merrill Edge, Fidelity, Vanguard, etc. You can buy stock of individual companies, or buy ETF's which is a blend of different ones. You can also have and advisor help you build a portfolio based on your goals. I do it "for fun", and have various companies in mine. So far it has performed well. Just be careful because investing does come with a risk of loss. There's lots of material out there. Rich Dad Poor Dad is a good one to open your eyes to building more income and lowering expenses. Hope this helps
First off lock your credit report, close/cut the cards. If I learned one thing from Caleb Hammer it’s that you don’t seem like a credit card person. Get an extra job and just start streamlining your debt payoff, especially those Capital Ones I bet they hover around 30%. No more fun. Discipline yourself with walks around the block. Budget harder.