Hi.
I'm in pretty deep debt of about 15,000. Divorce and private schooling, had me only making minimum payments..

I did some budgeting, and I'm hoping to put away at least 10,000 in a year.
The interest rates on 3 of the cards are LONE SHARKISH because my x husband defaulted on a JcPenney card in both of our names.

My solution is to pay off the highest interest rate cards along the JcPenney debt, but not until next year when I have 10,000 dollars. (This way, the cccs won't get all my money from interest rates) In the mean time, I'll continue to make payments ON TIME, Like I have been for the last six years. Also, some little cards will be out of the way, and then I can apply for a lone with zero interest for the final 3,500...

Is this a solution, or should I head in another direction...
I want my good credit back..

Holly, it would probably be faster for you to put as much as possible towards the card with the highest rate each month, then move on to the next card adding the minimum payment to what you paid on the first card.

With the non-payoff cards keep making the minimums.

Holly, I see this is your first post...welcome.

In response to your question, yes...and no. You have the right idea, but need to consider a couple of things.

First, be accountable for the situation you are in. You said the cards were in BOTH of your names, so you had equal responsibility to be aware of the payments and use of the account. You also made a choice to go to private school and make minimum payments for 6 years. You therefore contributed to this. I bring this accountability issue up to make a point. You have the power to make the necessary changes.

You said, "I'm hoping to put away at least 10,000".

What is this hope based upon? Did your budgeting show that it is possible? Does your buying history say it is probable? Have you made changes to your income, expenses, lifestyle, or habits that will make this a reality? How committed are you to getting this albatross off your back? If you really are committed, you will stop hoping, and start saving, NO MATTER WHAT. Skip the movies, skip eating out, wear last years clothes a little while longer, work a few more hours. Do whatever it takes to reach your goal, and let no one or no thing stop you.

You said that some of the cards (3) are very high interest, and you mentioned some others as well. Pay minimum amounts on the low interest cards, but pay as much as possible on the highest interest card(s). You may find you have available credit on a low interest card that would allow you to transfer the higher priced balances. Even a portion of the amount transfered will get you to a lower rate sooner. Be aware that transferring a balance could generate fees. Check out what the fees are (generally 3%) and only do it if there is a benefit. You may be able to just make a payment from the low interest account to the high interest one without calling it a balance transfer-thereby avoiding the transfer fee.

Next you said you wanted to save the money to avoid interest payments.

Interest will accrue as long as there is a balance. The sooner it is paid down, the sooner the interest will be reduced. Imagine you are saving your 10,000 in a bank savings account at 1% interest, yet your unpaid balance is charging you 28%. Each year you are losing ground by 27%. If you put your money in CD's at 5%, you are losing less, but still losing. Apply as much as you can, as soon as you can to the CC balances.

It is also imperative that you establish an emergency fund equal to 3-6 months income. You will have to balance the CC payoffs, with growing this account. Maybe start off with just one month, or two, but continue adding to the fund. This money is for when the car breaks down, or if you are sick and can't go to work. All too often the emergency fund is the credit cards and now you are paying interest on that emergency (adding insult to injury). Don't close the accounts (it effects your credit rating adversely if you do) but stop using your cards. Live on what you have, instead of stealing from your future. Realize that buying on credit raises the price of everything you purchase by 20-50% or more, depending on how long the credit takes you to pay off. Using your credit card to buy something because it is "on sale", takes away the money you thought you were saving.

Finally when all the debt is cleared, continue making those payments, now to yourself and your future. Each month have 10-20% withdrawn from your account automatically into an investment. This could be into an IRA, Mutual Funds, a life insurance policy, or an annuity. You will want to spend these dollars, just not today. This is for your retirement and security.

Good luck, and stay committed to your plan.

Dru

Thanks so much for your help..

let me straighten a few things out.. Although my x husbands name is on the account, I'm the main card holder, so it's my responsilbility. The company told me and my lawyer.

Next, private schooling for my daughter was 5,000 dollars and is now paid in full. I was able to pay that off in a year.

I am living in a rental for 250.00 a month. on average 440.00 is the total with utilities. My total monthly bills are 1,100 on average... paying more then the minimal on lowest cards that will be paid off by December.. I make 35,000 a year, plus 1,300 a year for on call. I have 600.00 in my savings acct. I own my car. I have no cable, I gave up going on vacation... I COME FROM A FAMILY OF 9. I know what it's like to do without... I can do it!

Lastly, I fear, if I don't grab a hold of it now, while I can sock some money away to pay off everyone, my situation may change.. It takes all that I can to stay here, but rent is cheap.. I want a better life...

you're headed in the right direction holly!

You may want to consider using that savings account to pay off one of your cards now, it will make the situation look better to have 1 less card to pay each month, plus you are probably paying more interest to that card than you are getting paid for the savings account.

Good to hear you're looking to take action already, Holly - one of the worst things a person can do with looming debt issues is to bury their head in the sand and just deal with it later. By planning proactive action now at least you can help ensure that you manage the debt before it becomes in danger of becoming unmanageable - there's a lot of good advice above for you to consider, and you already have the mindset for tackling this now before it gets out of control, so I wish you every success with that.

Thank you Brian!

I'll keep the faith!

Holly

Yes, it sounds like you have alot of great ideas given to you above. Just thought I would throw out there is there anyway you can work a second job even if it is only a couple a nights a week? Then you could take that income and use it to apply to the credit cards. Just a thought.

Hello Tater.

Believe me, I thought about it many times.. Being on call, 24/7, 365 days a year, (my choice)for a Dental office I work for, is a second job..and extra money.. It's too risky for me to take another job on the off chance I'll be called in for an emergency.. Tater, if you ever need a crown re-cemented, I'm your gal
Thanks for your input.

Holly

I'm not quite understanding why you want to save $10k before starting to pay off your credit cards. I understand the interest concern, but won't it also be building up while you're saving that 10k? In any case, good luck and I hope you can pull out of that debt soon.

isn't there a way you can get your ex to pay he's share of the debt? maybe get the courts involved.

never pay minimum you will never pay it off not in any reasonable time anyway