Help which card to pay first?

confused&determined · #1 (**permalink**) 03-01-2010, 03:10 AM

Hi, I'm 19 and from AZ and I decided I need to get a grip on my debts.
I basically have two credit cards, and maybe three things in collection (fingerhut, t-mobile, and paypal all less than $300) and a Sallie Mae student loan that I'm not worried about. It's the only one I've never missed a payment on. I pay $117 a month on the loan of $13k.
My two cards are through my bank and are:
Visa $4,685. limit of $4k and past due about four months. says the minimum payment is $862. apr 27.24%
Mastercard $848 with a limit of $600. min payment says $296. apr 18.24% also past due about four months.

I'm really nervous they'll go into collections and I want to talk to the bank rather than collectors. I only make about $400 a month at the moment but just completed school, and will be making approx $1600+ a month once I find a job. (Should be by April at the latest) I also have enough in savings to completely pay off the smaller Mastercard. What should I tackle first, and am I right in thinking about attacking the revolving debt first? I was also thinking of just starting to make minimum payments on both and paying whatever extra I could to the big card. All help is appreciated!
-Kailah

sapphirecapital · #2 (**permalink**) 03-01-2010, 05:29 PM

April is around the corner, bring the cards back to the limit and keep them there til you get a job, than attack them both at the same time

cvanp · #3 (**permalink**) 03-02-2010, 03:13 AM

Quote:

Originally Posted by confused&determined

Hi, I'm 19 and from AZ and I decided I need to get a grip on my debts.
I basically have two credit cards, and maybe three things in collection (fingerhut, t-mobile, and paypal all less than $300) and a Sallie Mae student loan that I'm not worried about. It's the only one I've never missed a payment on. I pay $117 a month on the loan of $13k.
My two cards are through my bank and are:
Visa $4,685. limit of $4k and past due about four months. says the minimum payment is $862. apr 27.24%
Mastercard $848 with a limit of $600. min payment says $296. apr 18.24% also past due about four months.

I'm really nervous they'll go into collections and I want to talk to the bank rather than collectors. I only make about $400 a month at the moment but just completed school, and will be making approx $1600+ a month once I find a job. (Should be by April at the latest) I also have enough in savings to completely pay off the smaller Mastercard. What should I tackle first, and am I right in thinking about attacking the revolving debt first? I was also thinking of just starting to make minimum payments on both and paying whatever extra I could to the big card. All help is appreciated!
-Kailah

Credit card companies don't want you to go into collections. They will work with you. Take their phone calls and tell them your situation. Tell them you need a hardship plan which will reduce your interest rate and forgive your past due amounts. Once you get that going, commit a chunk of every month to pay down the card that you can pay off the fastest while making minimum payments on the other. Then once that is paid, put the money you paid on that card toward your other one to get rid of it faster too. You'll be surprised how quickly you'll get out of debt.

AlFromLA · #4 (**permalink**) 03-02-2010, 08:09 PM

I would pay off the high interest unsecured debt first. Student loans and etc are usually secured and have less interest so I would make min payment for those and pay high payments for high interest debts such as CCs and etc.

confused&determined · #5 (**permalink**) 03-04-2010, 01:14 AM

Thank you all so much. I spoke with the bank, and they are settling my debts for far less than what I owe, and to boot, it'll report positively on my credit.

sapphirecapital · #6 (**permalink**) 03-04-2010, 12:40 PM

good, remember the debt waived will be taxable income, in 2011 you will receive a 1099-C

wysiwyg4 · #7 (**permalink**) 03-24-2010, 05:57 PM

Good job to talk to your credit card companies.

I just wonder how you got $13,000 in student loan. And you say just got out of school. Never heard that one before. Was it a private school?

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