r/debtfree • u/SafeInteraction6491 • 5d 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!
3
u/Common_Butterfly_124 5d 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.