Baby Steps and Debt
Date: Thu, 06/17/2010 - 10:14
‎ Does anyone know which categories the following debt would fit in to?
‎ $40,000 total debt. Currently all debt is in a HELOC.
‎ The breakdown is approximately $20,000 of this debt is for a home addition. (Bathroom and Bedroom)
‎ $10,000 is for a car purchase.
‎ About $10,000 represents a bunch of consumer purchases
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Good for you for attempting to tackle your debt! I've done the
Good for you for attempting to tackle your debt! I've done the DR program, and believe me, it does work.
I'm assuming you have your initial $1000 in savings built up? If not, do this first.
I would then take a look at the interest rate and the principal balance on each of your debts. Dave recommends starting to pay the smallest balance first, and then snowball those payments into each suceessive debt. Some people recommend tackling the debt with the highest percentage rate (slightly more bang for your buck that way,) but it may be harder to stay motivated that way.
It will let you amoritze it either according to interest rate or smallest to largest balance. Play with the numbers a bit and see what you're most comfortable with.
Hope this helps.
Hi Peter, Other than the consumer purchases all your debts are
Hi Peter,
Other than the consumer purchases all your debts are secured ones. According to Dave Ramsey you should start paying off on the account with the smallest balance first.
You will have to first create an emergency fund, which you can use for accidental purposes. Then list all your debts, and start making payments on the one with the smallest balance. This is known as debt snowball method. Along with making payments on this account, you will have to manage making minimum payments on all other accounts.
Thanks,
Lisa
