Long story short, I owe $28,900 in credit card debt across three cards. I’ve been researching the best way to pay it off.
I’m aware of the Snowball method. I discovered Velocity Banking, but that won’t work for me since I don’t have a good chance of getting approved for a personal line of credit (I was previously denied a couple of months ago).
I just discovered the Cash Flow Index and thought it might be my best option as it makes the most sense. Here’s some info:
AMEX: $8,500 balance / $316 minimum payment. CFI is 26.8.
According to the Cash Flow Index method, paying off my AMEX card would be the best place to start. This would free up cash flow, making it more efficient to pay down my debt. I would then move on to the Chase Sapphire, followed by the Chase Freedom.
For context, my salary is $84k, with a bi-weekly net pay of $1,882. I’m currently in the process of getting a new job with a salary range of $90k-$105k. After doing the math, my cash flow is around $900/month (this is after paying all my fixed expenses). I still need to account for groceries, gas, etc.
To determine your company’s CFI, divide its operating cash flow by its total debt service. If your CFI is well above 1, it might mean you have the financial flexibility to speed up debt repayment.
The CFI (Cash Flow Index) is a helpful tool for prioritizing your debt repayment. By targeting the card with the highest CFI, you can potentially free up more cash flow and accelerate your debt repayment.
That’s a lot of credit card debt! But don’t worry, you’ve got a plan. The Cash Flow Index (CFI) method makes sense here, especially since it’s taking into account your minimum payments and the amount of debt on each card. Just a friendly reminder: While the CFI method is a great strategy, don’t forget to factor in your lifestyle. If paying off AMEX means cutting back on essential expenses, it might not be the best choice.
Well, it looks like you’ve got more credit card debt than I have snacks in my pantry, and trust me, that’s saying something! But you’re on the right track with the Cash Flow Index method. It’s like picking the right boss battle in a video game—start with the AMEX, which has the lowest CFI, to free up the most cash flow, then tackle the Sapphire and Freedom cards.
With your salary and potential new job, you’ve got some solid cash flow to work with, and once you start knocking down those balances, you’ll see that snowball effect, even if it’s not the Snowball method itself. Just remember to leave some room in your budget for the essentials—like groceries and maybe a little treat for yourself here and there. You’ve got this!
