Debt/Savings balance

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  [Deactivated] on 26/02/2014 - 13:10

  +2

  Snowball! http://www.whatsthecost.com/snowball.aspx

  Snowballing is all about paying your debts in the correct order. Generally speaking you should attempt to pay off the debts with the highest interest rate first.

  Calculator is in £ but the concept is still the same.

  My guess is your "interest free debt" will suddenly jump to 35+ plus as the end of the interest free period, so you would need to take that into consideration.

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    [Deactivated] on 26/02/2014 - 13:17

    Interest free debt breakdown:
    2 year interest free on $5000, it was that Honda CBR250 repsol promotion. Easy to meet that schedule, and it will be paid off before the end of the loan. The rest of the interest free is borrowed from couple savings, so no interest there.

    The snowball thing is great, and I think this situation with the interest debt is unique, because the amounts (cash and interest) add up to roughly the same amount of interest per month. So I could plug away at both, or focus on one… But I don't think it'll make too much difference?

    What do you think about that Richard?

    • 

      retiredfeline on 26/02/2014 - 13:21

      +3

      Focus on the rate, not the amount. Your repayments always go furthest when paying off the highest rate first.

      If you can refinance at a lower rate, do so.

      And make a budget.

      • 

        horsome on 26/02/2014 - 14:01

        Yes budget!!!

        It's obvious but so essential to separate the necessary costs from the unnecessary.

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  geek001 on 26/02/2014 - 13:42

  Do you have any assets? or able to borrow mum/dad's assets to secure your debt? That will usually bring down the interest rate on your loan when you consolidate your debt, I would do that immediately as assuming you get 6% on your secured debt, you will be saving ~ $1.30 a day on your credit card debt, and $1.23 a day on your personal loan. Thats $2.53 a day!

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  altomic on 26/02/2014 - 13:42

  +3

  transfer all CC debt to a new 0% interest CC.

  pay it off like a mad person.

  throw all funds at it.

  stop buying your lunch. make it at home or get something inexpensive but nutritious from the supermarket. e.g. curry pouch + precooked rice (should be less than $4).

  Not buying things -make a list of what you see and would like to buy. keep a running tally of how much your not spending.

  every dollar you don't spend and put into reducing debt is worth $1.15 (averaging 15% interest on your 2 interest bearing loans). think of it a return on investment -in a reverse sense.

  the money I'm investing today is going to save me that money + 15% interest in a year. -that's a good return!

  you're aware of the cash that you're currently throwing at just interest - that is penalty money.

  I look at using money not to pay debt as - might as well take up smoking, but not buy cigarettes, and throw a 50 cent coin away everytime you feel like a cigarette.

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    bluedufflecoat on 26/02/2014 - 13:44

    I like the 50c illustration with cigarettes.

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  [Deactivated] on 26/02/2014 - 13:54

  Having a small pool of cash is good thing if you can, but not essential.

  Pay off your debt first. The interest rate on your debt is greater than your cash account interest rate. Always pay off your highest interest rate debt first and make minimum payments on the rest.

  Except if there are penalties for not paying it off in time, ie interest free stuff where you get steamrolled with all the interest from the 'free' period. Just work out what you need to pay each period to be clear it by the due date(less one at the end to be really sure).

  Also on loans you might get slugged if you pay it off too early. You need to check this out.

  We have a credit card that we use for all daily living expenses and it gets paid off within the month. We have never ever paid interest and as long as we stick to a budget the timing in the month doesn't matter. That elasticity is good.

  We moved a debt on our other card to a new NAB credit card that had 15 month interest free for transfers. This will save us over $600 which is worth it. You need to be committed to never using the card for anything else until the balance is paid off as well. Get the card and chop it up instantly so you have to get a new card if you want to use it.

  Don't be late on any payments ever again. Australia is moving to a different credit reporting structure this year where you will get black marks against your name for late payments.

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  [Deactivated] on 26/02/2014 - 13:56

  Also, if you suck at budgeting take a look at https://www.youneedabudget.com/

  This bit of software rocks, it works around a concept of only budgeting what you have to spend right now. Has a neat mobile app and they sync perfectly if you use dropbox or similar to store the database.

  If you use if properly you will be able to see instantly what you can and cant afford.

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  [Deactivated] on 26/02/2014 - 14:40

  Reduce your outgoings. Around the time I hit 30yo, I realised I didn't need all the little crap I was buying (magazines, etc) and I threw the anchors on random spending and became much better for it. I never set a budget, as my budget was just to spend only what I needed + a little for fun. Fast forward to now and the credit cards no longer exist (get rid of those except for a debit card until you can trust yourself with them again), and no worries about finances whatsoever as I am completely debt free. It used to be so bad that I never even checked my credit card statements in the mail, so everyone can turn it around.

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  pebee47 on 26/02/2014 - 18:31

  Do a CC balance transfer to any bank with a 12 month interesr free transfer rate; then as soon as the new card comes in close current CC account and physically chop up new card. Use a Debit card for necessary purchases. Do the old visual thing for CC debt = thermometer chart on fridge, colour in as debt goes down. That way you will keep focus.
  Then do the same with next highest debt.
  When debts paid off use same for next goal; House deposit, new vehicle, o'seas holiday (you haven't had one whilst doing the "hard yards" have you?), etc.
  Qantas cash card is working for me: I preload with regular budget amount each payday, get 1 QFF point for every $1, + no interest or fees.