Wednesday, March 31, 2010

Debt update

The first thing is that DW is getting more hours at work now, which should (I hope) alleviate some of the monthly budget pressures. We really need her to be bringing in $800 to $1,000 per month for the cups to stack properly.

If that's okay, then the debt snowball can go into effect. Our toppest priority debt is my Visa card, which has about $5,300 on it (down from a high of almost $8,000) but at 19.9% interest. That interest, I don't need to tell you, is a killer.

Some people recommend getting a peer-to-peer loan from Lending Club, which usually is between 7 and 9% interest and can be paid off over 2-3 years. Alas, they do not lend in Kansas, and I'm not sure my short-sale-effected credit rating would qualify anyway.

But I noticed on the blog PT Money that Citi is offering a card with 0% on balance transfers for up to 15 months, so I applied. They approved me, but (because of my wounded credit) only for $1,600 and at 0% for only 7 months, after which it goes back to 20%. But it's better than what I've got now, so I did it. I'm expecting a pretty sizable tax refund, so if I pay two months' snowball on Visa 1 with that (my snowball payment on that card is about 3x the minimum payment), plus remove $1,600 to Visa 2, I should be able to pay off Visa 1 at about the time the grace period ends on Visa 2. My calculations are that this will save me the equivalent of about 1 monthly payment, which isn't nothing.


PT said...

Sounds like you are taking the right steps. I appreciate the nice mention here.

For more info on using p2p, check out Matt Jabs at Debt Free Financial. That's how he's paying his debt off.

Good luck to you and thanks again for the mention!

PT said...

Oh, I forgot to mention. You could also call them up and see if they'll raise that limit. If not now, you may can check back in a couple of months and they might up it. Something to consider...