‘Have about $38k in cc debt but came into some $$. Not enough to pay all debt though’: I need advice on how to strategically pay down credit cards. Any suggestions?

Hi Money Minder,

So, here’s the deal. I’ve got around $38k in credit card debt. I know, it’s a lot, but hey, emergencies happen, right? Managed to come into some cash, but it’s not enough to wipe out all the debt. I’m looking at about $24k after taking care of attorney fees and whatnot.

Here’s the breakdown of the debt:
– Credit Card 1: $14k
– Credit Card 2: $11k
– Credit Card 3: $7k
– Credit Card 4: $6k

Would it make sense to bring all the cards down to around 15-20% of the credit limit and work from there? I reckon it would lower my payments and make things more manageable.

Or should I focus on tackling the two bigger ones and bring them down to 0-5%? Then just deal with the last two as they are?

Just need some advice here. Appreciate any help you can give me.

Thanks,

Response from THE MONEY MINDER:

Hello There,

Sorry to hear about the challenging circumstances that led to your credit card debt. It sounds like you are on the right track by coming into some funds to help pay down your debt. Considering your breakdown of debt across four credit cards, it might be advisable to prioritize which cards to pay down first.

One practical approach could be to focus on paying down the cards with the highest interest rates first. By paying off the debts on those cards, you can save money on interest payments in the long run. However, if the interest rates are similar across all four cards, you could consider paying down the cards with the smallest balances first (known as the “snowball method”).

In terms of percentage of credit limit, it could be a good idea to aim to bring all cards down to around 15-20% of their credit limits. This can help improve your credit score and reduce the financial burden of high credit card debt. If you have enough funds after paying down the cards to that level, you could then focus on tackling the higher balance cards to bring them closer to zero.

Ultimately, the most important thing is to find a strategy that works best for you and helps you make progress towards paying off your debts. It may also be helpful to reach out to a financial advisor for personalized advice tailored to your specific situation.

All the best from THE MONEY MINDER.