Question for the Money Doctors
Question submitted on Jun 27, 2011.
QuestionMy fiancee and I are trying to get our finances in order. He has about $20,000 in credit card debt. I have none. We want to pay off credit cards. What is the best thing route to take. Consolidate, pay off certain cards? He has good credit, but mine is fair from a previous divorce. So we want to start off on the right foot as a couple. What do you suggest.
Hi - I am glad you have decided to get your credit cards under control.
Make sure you and your fiancee are on the same page and committed to do this. You may have to share in the sacrifice for a short time but the end-result will mean
To payoff your debt, look into the the Dave Ramsey "Snowball" plan. The principle here is to pay minimum payments on all credit cards except the smallest balance - which you attack with ferocious intensity. Otherwise, nothing gets accomplished because all your effort is diluted. Under the Snowball plan, first accumulate $1,000 cash as an emergency. After that, list your debts in order with the smallest payoff or balance first. Concentrate on paying the little debts off first which will give you quick feedback This will help you stay with the plan.
Once you have the smallest balance paid off, your New Payment is found by adding all the payments on the debts listed above that item to the payment you are working on, so you have compounding payments which will get you out of debt very quickly.
You attack the smallest debt first, still maintaining minimum payments on everything else. Do what is necessary to focus your attention. Keep stepping up to the next larger bill.
Dave Ramsey has a free tool to help you do this - follow this link: https://www.mytotalmoneymakeover.com/index.cfm?event=displayDebtSnowballLanding
Good luck. Stay focused and you will have your credit cards knocked out in no time!
For additional information visit http://www.360financialliteracy.org/