I’m trying to figure out the best way to tackle my debt. Right now, I keep things pretty simple, no big expenses. I’m 27, make around 70k a year, and I’ve got about 40k in debt: 25k in credit cards and 15k in student loans. So far, I’ve been doing the debt snowball method, which has helped a lot. I also use cash envelopes to avoid overspending and budget everything.
Recently, I’ve been thinking about taking a personal loan to pay off my credit cards since I have 5 with different due dates. I feel like having one due date would make managing payments and interest easier, maybe? My goal is to be debt-free in the next 1-3 years.
My spending habits are a lot better than before, and I’m excited to eventually save instead of paying off debt. Any tips or advice?
You’re doing well, so don’t complicate things by taking a personal loan. Using more debt to solve debt doesn’t really help; it often makes things harder.
If you want a single due date, you could just choose one day to pay all the cards. That way, you don’t need to get a loan for that convenience.
Stick with the spending control and debt snowball method, and you’ll be debt-free soon.
I took a Sofi loan at around 5% to consolidate my high-interest cards (they were about 20% APR). The payments were way easier to manage, and it felt amazing once I cleared the debt.
Try writing down your statement dates and due dates for each card. Pick a day in between and pay them all on that day. Just don’t get too close to the actual due dates.
If you can get a personal loan to cover the credit card debt, you might find a lower APR, especially at a credit union.
If you can’t cover the full amount, maybe try a balance transfer card with a 0% introductory APR, but only if you’re confident you won’t spend more on the cleared cards. Maybe consider canceling them, starting with the newest or highest APR cards.
@Kieran
I wouldn’t recommend canceling your cards; it can really drop your credit score. I do agree with a balance transfer to a 0% APR card if possible. You could also look into a low-interest loan through something like LendingTree.
You could keep going as you are and pay all your cards on the same day, like others mentioned. If you can get a personal loan with a lower interest rate, that might be worth it. Another option could be a 0% APR Balance Transfer card for some of the debt.
You’re definitely on the right track. Think of this as a numbers game. If you’re paying 25% interest on 25k of credit card debt, that’s $6,250 in interest a year, or over $500 a month. Replacing that with a 10% personal loan could save you a lot.
Just make sure you don’t increase your debt. Keep up with the full payments every month, avoid running up new card balances, and don’t let anyone charge you 25% again! You can probably leave the student loans for later since they likely have a lower interest rate.
If things are really tough, maybe think about bankruptcy. Talk to a few bankruptcy attorneys to understand the process and costs.
Keep in mind that this would only cover your credit card debt, so you’d still need to deal with student loans. Some people also go for the minimum payment on student loans for 15 years, after which they might get forgiven.