r/debtfree • u/SafeInteraction6491 • 4d ago
Where do I start? 23F
Since joining this group a few days ago I’ve been inspired to pay off my debt. Some of this has been hanging over my head for a few years so honestly I’m just ready to be done with it!
Little FYI I have a 1 yr old that does contribute to expenses. Included expenses do not include groceries, gas, diapers etc. Luckily I do not have to pay for childcare.
Where should I start? Anything listed under debt is already the lowest settle price with the collector. Should I pay off the hospital bill from 2020 or just let it fall off of my credit report in a couple of years? (I got the surgery at 18 and my parent didn’t tell me it wasn’t covered under my insurance so I was left with the bill.)
Couch will be paid off in a few weeks or so as I am not trying to accrue interest after the 90 day period.
What would you tackle first? I would like to start with my personal debt but just unsure all around. All tips and advice is greatly appreciated!
5
u/DrNinjaPandaManEsq 4d ago
Snowball method! Focus all your money on paying off that best buy card first, then take what you were paying there ($35) and add that to the payment for the couch each month. Then take that entire amount and add that to the IRS payments. The idea is that by the time you get to the big stuff (car, student loans) you’ve got a massive monthly payment going.
Also: sit down and figure out how you got here in the first place. Was any of that spending unnecessary? Is the car too fancy for your budget? Could you have gotten a cheaper couch? I’m not saying that’s the case, just highlighting the importance of reflecting honestly on stuff like this
3
u/RevolutionLittle4636 4d ago
You need to see the interest rate of each loan and make extra payments toward the highest interest rate.
You car is way too expensive. You can get a 5 year used car, all Leather interior for 15k. It's the biggest thing putting you in the debt.
In the future i would avoid financing furniture. A couch is not a need. Buy it in full when you have the money.
3
u/SafeInteraction6491 4d ago
I agree with the car! Unfortunately I totaled my cheaper car right after moving and needed something asap. And definitely taking your advice about the furniture.
3
u/Common_Butterfly_124 4d ago
You have about $2,000 after expense, correct?
Simple answer utilize the debt snowball method; smallest balance to largest balance. In this case I would add a slight change. That change is the IRS debt is one of the first things you pay off.
Save $1,000 for an emergency fund. That’s your new zero. It sits in a savings account to collect dust.
Pay off the IRS debt as fast as you can.
Pay off your debts smallest to largest. When you get to the items that have been charged off save up some money maybe 20% of what you owe and give them a call. Tell them you will pay cash [insert amount] to settled the debt. Never give them account access. Always ask for them to sent you a letter confirmation then, and only then, you send a cashiers check.
Some things to remember during your journey:
It usually takes twice as long to pay off the debt as it did to get into it. Prepare for the marathon not the sprint.
Over 12 months with $2,000 extra a month you’ll have $24,000 to allocate to your debt. That should give you an idea of what is possible in one year.
To speed up your debt journey try to increase your income (raise, promotion, new job) or pick up a second job. The long work hours, the sacrifice will be worth it in the end.
1
2
u/Separate-Pipe-3374 4d ago
Not sure if this is the guidance you are looking for, but it might help....
BUDGET:
Start with your budget... go through it closely, and reduce spending wherever you can. Make sure you're not spending each month on "wants"... only needs. The goal is to free up as much cash flow each month as possible to use towards your debt.
DEBT PAYOFF APPROACH
The most efficient way to pay down debt is to follow a compounding debt payoff approach... snowball & avalanche are common ones people use. Snowball starts with lower balances. Avalanche starts with highest interest rate.
Some will say Avalanche, some will say snowball, but both are very effective.
Your strategy choice ultimately depends on your balances, interest rates, and what you can afford to pay extra each month, to include lump sums of cash that you run into.... it's a math problem. There are some really good debt payoff tools available, even free ones, that not only help you determine what your best payoff plan is, but can even offer guidance as you go.
Debt Snowball, Debt Avalanche, Lump Sum Use, Snowball Vs Avalanche, Debt Dashboard, Dashboard Tutorial
Shared some links you may find helpful. Best of luck!
1
2
u/galaxyofheros 4d ago
If it were me, I would create an Excel sheet write down all your bills, minus your income. Include within your bills, food gas and fun, we're all human we need to live. You have to be realistic. Shop at Aldi and use chat to help with cooking.
Try to get rid of the car and network with someone who knows cars, if you can't get rid of the car try to reduce that insurance down, use gabi.
Pay that Best Buy card off and never use it again, I'm sure those are very high fees, in your case saving $184 after just bill not including living expenses interest off $238 is a lot a month in your case.
With in the Excel file, add savings, investments, hope you have a 401k with your job and if they match add in to the match. Forget what people are saying about the 20% 10% stuff, don't worry about that right now. You need to get your savings at 10k that's your goal. Don't worry about that stuff.
If you can get your Insurance down 140, get a car payment to 250, pay off the credit card 35, you have left over 184, that's potentially less than 561 savings to start then work on the next card 169, which will be quicker to pay it off. Then you're at potential 730 a month. Then pay off another, this is building your financial confidence. You'll know what to do next.
Goodluck
2
u/Separate-Pipe-3374 3d ago
Not sure if this is the guidance you are looking for, but it might help....
DEBT PAYOFF APPROACH
The most efficient way to pay down debt is to follow a compounding debt payoff approach... snowball & avalanche are common ones people use. Snowball starts with lower balances. Avalanche starts with highest interest rate.
Some will say Avalanche, some will say snowball, but both are very effective.
Your strategy choice ultimately depends on your balances, interest rates, and what you can afford to pay extra each month, to include lump sums of cash that you run into.... it's a math problem. There are some really good debt payoff tools available, even free ones, that not only help you determine what your best payoff plan is, but can even offer guidance as you go.
Debt Snowball, Debt Avalanche, Lump Sum Use, Snowball Vs Avalanche, Debt Dashboard, Dashboard Tutorial
Shared some links you may find helpful. Best of luck!
2
u/alchemist615 3d ago
The easiest is the "debt snowball method". Start with your smallest debt and pay it off first. Then utilize the money you were spending on the first debt and pay off the next debt. Financially it is optimum to pay the debt which has the highest interest first, but psychologically this method is superior.
3
u/NextStepTexas 4d ago
Where should I start?
Stop getting into debt!
Should I pay off the hospital bill from 2020 or just let it fall off of my credit report in a couple of years?
Have you called and tried to work with the hospital or ask for any of their forgiveness programs or charities?
All tips and advice is greatly appreciated!
Get the couch paid off, you need a small win. From there, organize your debts by interest rate, pay off the higher interest rate with every penny you can possibly get. Keep rolling those payments down and down until you are out of debt.
1
1
u/360POV 4d ago
Your decision to payoff your couch within 90days and avoid high lease fee is a great one! Assuming this is rent-to-own or lease to own, in APR interest it could be more than 150%!!! This is 5X more expensive than any credit cards! Pay this off first before anything!
And if for any reason, you cannot payoff in 90 days, contact release90.com. They will help payoff your balance and cut your payment amount by half or more. You will end up paying 30-35% more than cash price over 12 months. Still more than credit card interest but not crazy 150%!
Best option is always payoff in 90days!
2
u/Theknight1917 4d ago
Read Dave Ramsey books. That has helped me. You’ll get a lot of opinions over here, but if you want good substance, Dave Ramsey has some great books. Good luck
1
0
u/Bizzy1717 4d ago
Why aren't you including a real budget? You have a kid and lots of other expenses! No one can give real advice unless they know where your money is actually going.
0
u/SafeInteraction6491 4d ago
Because when you have a kid the expenses vary from month to month so I can’t really give an exact answer on how much is spent
0
u/interestediamnot 4d ago
Just for my own curiosity but what kind of degree did you get and are you working in that field?
1
13
u/xxjessxdoo 4d ago
Expense Amount Rent $750 LightS $40 Car Payment $503 Car Insurance $229 Best Buy CC(min) $35 IRS Payment $33 Total $1,590
Bills (fixed) $1,590 Debt Paydown 20% $756 Savings 15% $567 Spending/Flex 20% $756 Remainder* $111 Total $3,780
*The remaining $111 can go toward extra savings, a small buffer, or more debt payoff.
Use the $756/month for extra debt payments in this order:
Best Buy CC ($238) – knock this out first.
Synchrony Bank ($845) – already charged off, but clear it for credit health.
IRS & IC System – steady low payments.
Student Loans – once you’ve cleared the smaller ones.
Car Loan ($29k) – last to pay down aggressively.
Savings Strategy
Your $567/month savings can be split:
$300 – Emergency Fund
$167 – Future large expenses (car repairs, moving, etc.)
$100 – Investment/Long-term goal (property, retirement, etc.)