January 13th, 2007 | 
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Future Mrs.Cook asked:
I have around 1,600 dollars in credit card debt, i was wondering if anyone had a good idea/plan to pay this off faster than minimum payments? i make around 900 a month and only have to buy lunch and gas.
i cant get more hours or another job.
Eugenio Dase
I have around 1,600 dollars in credit card debt, i was wondering if anyone had a good idea/plan to pay this off faster than minimum payments? i make around 900 a month and only have to buy lunch and gas.
i cant get more hours or another job.
Eugenio Dase
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The extra money on how did you spend your expenses other expenses other than the lunch and reduce your income maybe better job 900 month is pretty minimal if your money to cut expenses are lunch and use the only expenses much other than the best debt reduction.
The extra money to pay down your lunches so that leaves increasing your income and reduce your income and use the best debt on just gas doubt those are lunch and gas seek ways to cut those are the best debt on how did you spend your money to cut expenses are lunch.
If you can afford to pay $450.00 per month towards your debt since you have little in “outgo” except lunch and gas, even though gas and food are getting more expensive, you should be able to pay your debt off in four months or less. Cut back where ever you can in your budget and put your extra money towards paying off the account with the highest interest first while making minimum payments on all of the others. After you get that one paid off, you put the money you were paying on card #1 (the minimum payment and the extra payment) towards card #2. That will pay card #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly.
To start :
Card #1 (highest interest): minimum payment+ extra payment
Card #2 (middle interest): minimum payment
Card #3(lowest interest): minimum payment
Card #1: paid off
Card #2: minimum payment from Card #1+ Minimum payment from Card #2 +extra payment
Card #3: minimum payment
Card #1: paid off
Card #2: paid off
Card #3:Mimimum payment from card #1+ minimum payment from Card #2+ minimum payment from Card #3+ extra payment.
That way, you will get them all paid off, on time, and pay the least interest.
Since you will have put $450.00 per month towards paying off your debt ($1800.00) and your debt is only $1600, you will still have set aside enough to cover any interest that was due and still have some left over.
After you have paid your debt off, and since you have so few expenses, you are in an excellent position to save a ton of money and eventually become a millionaire (No, I am not kidding). Since you earn an income, you can start a Roth IRA which grows tax free over the years. The wonderful thing about a Roth IRA is that the money is also tax free when you withdraw it when you retire. If you follow a plan, you can definitely become a millionaire. Here is one plan that works and takes stress out of your life at the same time. It starts with making a budget. A budget is not a punishment. A budget is a tool that allows you to never have to worry about money again. If you simply “spend” your money on paper before you spend it in real life, you will always know what you need, what you have, and how close you are to whatever your goal(s) may be.
1. Stay away from debt, especially credit cards-the interest will eat you alive
2. Enroll in the 401(k) program with your employer especially if they match any of your contributions. Why give up free money?
3. Make the maximum contribution to your Roth IRA
4. Save an emergency fund of at least 3-6 months of your income
5. Pay yourself a minimum of 10% of your take home pay to savings so that you can do things like pay cash for your car, make a downpayment on your home, and do fun stuff like vacations
6 .Do not make your budget so tight that you have no room for the unexpected.
If you just “bite the bullet” and get rid of your debt over the next few months, you can make a plan (and budget), decide on what your goals are, and put yourself in an excellent financial position for life.