Paid off 1st CC!- Budget101 Discussion List

It wasn't much but it's paid off! We plan on paying off another one as soon as our refund hits the bank. It's another small one but it's a start. Paying off that cc was an amazing feeling. It has me motivated to find more ways to live frugally and cut down spending. Here's a question

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  1. #1
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    Default Paid off 1st CC!


    It wasn't much but it's paid off! We plan on paying off another one as soon as our refund hits the bank. It's another small one but it's a start. Paying off that cc was an amazing feeling. It has me motivated to find more ways to live frugally and cut down spending.

    Here's a question though....I'm getting two sides on this issue. Should I close the accounts or leave them open? Which is worse for my credit score? I really don't want to leave an account open and honestly, I think it's kind of stupid to leave an account open if you're not going to use it. Plus, there's that temptation to actually charge the card right back up.

    And I think it's been mentioned somewhere on these boards before...Dave Ramsey seems to have his head on straight. I checked out 3 of his books at the library (yeah, that was a small accomplishment since I almost bought the books at Barnes & Noble but went to the library instead), and so far, I love him! I do find some of his "Total Money Makeovers" stories hard to believe. I read one of the success stories where the couple was over $62,000 in debt and had it paid off in 22 months with an annual salary of $42,000.

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  3. #2
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    Default Re: Paid off 1st CC!


    your debt to credit ratio is used in part when figuring your credit score, so it may help to leave it open. I have heard though if you dont use the cards at least once a year it will also hurt but I don't know how true that is. Congrats on paying off the card though, i know it makes you feel great
    Mdowdy

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    Default Re: Paid off 1st CC!


    I have heard that depending on the amount you can charge to the card it could be a bad thing for your credit. It shows that you have the potential to owe the full amount should you choose to charge on it.

    This might be something to check with your bank to see what they have to say.

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    Default Re: Paid off 1st CC!


    Duh-forgot to add-CONGRATULATIONS ON A MAJOR ACCOMPLISHMENT!!!!

    Just wait to you get that next one paid off it will feel even better

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    Default Re: Paid off 1st CC!


    its an awesome feeling isnt it??

    Congrats!!!!!!!!!!

    It can actually damage your Credit score to close all your cards. My advice (because Im going through it) is look at all of your credit cards, and make a determination as to which ones and how many you want to keep open. If you have 10, I would close 4-6. I would only close them after you pay your other debt down. its always good to have SOME credit open to keep your credit positive.

    i would also recommend you charge a small balance every so often and pay it off in 1 month to keep your credit fresh.
    Terra , Wife to Kevin, Mom to Cassidy (12) and Ciara (2)

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    Default Re: Paid off 1st CC!


    We have 9 cards. We are planning on keeping at least 2, the 2 that have the lowest interest rates. There are 2 cards, Kohl's and JC Penney, that I'm 50/50 on. I shredded my cards for the time being to prevent charging but I'm not sure if I want to close them. I love shopping JC Penney for the same reason I like shopping Kohl's. Sales and clearance!

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    I agree... JC Penneys is the one we keep as well. FOr all the same reasons. LOL

    My kids get good clothes there on sale.
    Terra , Wife to Kevin, Mom to Cassidy (12) and Ciara (2)

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    Default Re: Paid off 1st CC!


    GREAT JOB ... now what was the minimum payment on that card? Take that amount and add to the next lowest amount card. It will start to 'snowball' really soon, which will make you feel so much better

    BTW when we were in the military I had 38 CC. Back when I was younger getting a card as a women was darn near impossible unless you had a male sign it for you - ditto loans. I swore I would NEVER be in that posistion again and somewhat went way over <g>

    For reg CC keep the ones with the LOWEST interest rate. IMO
    If you have 7 reg CC cut that number in half (***make sure at least ONE you keep has YOUR name as primary)

    I love Penny's too .. I avoid it like the devil though

    When it comes time for buying the house, remember to go for less cash price. A house nickel dimes you to death the first few years. You can add in the fancies later.

    Don't have the mortage payment at max, if anything happens you may not be able to afford it. We bought with the idea of making the payments from ONE paycheck which was a good thing later.

    Ria

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    Default Re: Paid off 1st CC!


    now what was the minimum payment on that card? Take that amount and add to the next lowest amount card. It will start to 'snowball' really soon, which will make you feel so much better
    Yeah, that's what we're doing. I told DH about the "snowball" thing and he thought it was pretty funny...the term, not the action. I'm also keeping one card as me primary also. Actually, the one reg CC card I'm keeping is mine only and then DH is keeping the one that is in his name only.

    And with the mortage, thanks for the info. We're still looking for the house even though I don't think it's a good idea with finances being the way they are.

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    Thumbs up Re: Paid off 1st CC!


    Once upon a time..ok only 1 1/2 years ago I was the exec. v.p. at a credit union (moved to NY so I had to leave that job seeing it was in MA). Anyhow, one of my jobs was to approve loans or deny. We never liked to see too many credit cards because yes if you got yourself in a pickle you could charge each of them to the max which of course is never a good idea. A couple of store cards and one major credit card is really good enough. All stores offer "get such and such % off" if you open a card or special sales- well if you think about it you save nothing if you do not pay those cards off right away-they have 19%+ interest on balances that carry over so what use would it be to get 10% when you open it. I think that cutting the cards was a good move and not using them is not going to hurt your credit score. Once you have your debt paid off decide then what cards you want to keep and what ones to close. Do not close them now as it will hurt your score as well as your debt ratio. There is so much I learned from looking at credit scores, classes I took, etc so I would be happy to answer any questions about that. Oh...I too have read Dave Ramsey's Total Money Makeover- I do love that book and have lent mine out many times. I don't agree with some of the things he says for example not needing to have a credit card at all or not caring about your score yet all and all his advice is awesome. Congratulations on paying off your first cc!!!!

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    Do not close them now as it will hurt your score as well as your debt ratio
    Debt ratio? Is that the same thing as debt to income ratio? The whole thing with the debt ratio and such is so confusing. We were told by a VA representative (we'll be getting a home loan through them SOMEDAY!) that our debt to income ratio was too large to actually get the loan. Most of our cc have at least $6000 credit limit and they are pretty much maxed. I know that's bad of course but it would actually hurt our credit scores to close them after we pay them off?

    Yeah, the whole thing with not needing a credit card I find hard to believe. I know that we can use debit cards to reserve room, airline tickets, etc. but I think it would be very difficult in the world today without at least one credit card. I also don't agree with not caring about your credit score. He mentioned something about using cash to buy a house/car and I just don't see that happening. I know DH's parents have bought their houses/cars without loans but they are also more financially set then we are. They have no debt, no credit cards (I don't even think they know what credit cards are!), they don't even have a debit card and use either cash or a check to pay for things. That's good of course but I just couldn't imagine buying a house or car with cash/check.

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    if you have $30,000 available on credit, and $6000 is what you owe thats one ratio.
    If you have $10,000 available on credit and still owe that same $6000, then the amount ratio of credit to debt is much larger % wise and you look like you are more maxxed out, and therefore more of a financial risk. know what I mean? thats why closing all the credit cards can lower your score.

    the more credit and less "debt" you have, the less of a risk you appear to be in the eyes of the lenders. It shows them that you can have credit without maxing your cards out.

    Make sense?
    Terra , Wife to Kevin, Mom to Cassidy (12) and Ciara (2)

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    Default Re: Paid off 1st CC!


    THOUGHTS FOR HOUSING:
    When are you due for orders?

    Are you planning on staying here or moving somewhere else for retirement?
    When is retirement? You want to try to make the payment low enough that the retirement will cover most or all of it.

    Is your base on the foreclosure list (or even in the maybe stage)?

    What is the current housing prices where you are? Chances are they are going to end up going down at some point because of the housing market.

    Even if you don't have to do the 25% down you do want to have extra $$ to put down on the house so your mortage will be less. Later taxes may change but right now you can deduct interest (its not dollar for dollar off the income - usually for every $50 it takes 6-12 off *check the chart in the book for this years to give you an idea).

    Ria

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    Default Re: Paid off 1st CC!


    Oh I also do the "snowball thing".

    i also pay the bill that will add the most back in my budget monthly.

    I have a 24% credit card with only a $500 balance that i pay $24 /month on
    I also have a 20% credit card with $900 with a $31/month
    I have a $1600 balance NO INTEREST on my daughters orthodontia bill that I pay $221/month on.

    I will be paying the ortho bill off first, because it yields me $221/more a month to do what I need to do. in 2 months, Ill be able to pay off the $500 bill, and in 5 more months, the other CC will be paid off.

    SOmetimes its all about what you can add back in your budget the quickest, too.
    Terra , Wife to Kevin, Mom to Cassidy (12) and Ciara (2)

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    Default Re: Paid off 1st CC!


    Gosh, we've been due for orders for over 5 years now!...lol When DH was first stationed at Warren, they said we would PCS in 2 years. WHATEVER!...lol We plan on staying in Cheyenne when DH retires in about 2-3 years. He's still unsure if he's going to stay in past 20 which is another reason why I'm not so sure about getting a house now. Warren more than likely will not be closed because it's one of the missle bases.
    The whole house thing is really on the back burner for now since I really want to get some of our debt paid off before we buy a house. Thanks for the info though!

 

 
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