› Budget101 Discussion List Archives › Budget101 Discussion List › Paid off 1st CC!
- This topic has 17 replies, 7 voices, and was last updated January 28, 2009 at 6:58 pm by .
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January 26, 2009 at 8:46 pm #269953
mmclean11
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.
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January 26, 2009 at 9:44 pm #412586
mdowdy
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
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January 26, 2009 at 9:47 pm #412587
wilbe95
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.
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January 26, 2009 at 9:48 pm #412588
wilbe95
Duh-forgot to add-CONGRATULATIONS ON A MAJOR ACCOMPLISHMENT!!!!
Just wait to you get that next one paid off it will feel even better 🙂 -
January 26, 2009 at 10:11 pm #412589
naturalmommy
its an awesome feeling isnt it??
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.
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January 26, 2009 at 10:49 pm #412599
mmclean11
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January 27, 2009 at 12:39 am #412618
naturalmommy
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.
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January 27, 2009 at 10:18 am #412640
HSLINKS
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
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)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.
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January 27, 2009 at 7:43 pm #412691
mmclean11
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.
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January 27, 2009 at 8:15 pm #412695
kkiriazis
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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January 27, 2009 at 8:54 pm #412701
mmclean11
Do not close them now as it will hurt your score as well as your debt ratio
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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January 27, 2009 at 9:46 pm #412715
naturalmommy
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.Make sense?
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January 27, 2009 at 9:50 pm #412716
HSLINKS
THOUGHTS FOR HOUSING:
When are you due for orders?
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.
Ria
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January 27, 2009 at 9:54 pm #412717
naturalmommy
Oh I also do the “snowball thing”.
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.
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January 27, 2009 at 10:08 pm #412719
mmclean11
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! -
January 28, 2009 at 7:51 am #412732
HSLINKS
natural mommy,
i think that this means you will pay off ortho in about 8 months then the additional 7 for the other CC – total 15 months ish
Not sure what the min payment would be for the ortho , hopefully you can do 21CC1: if you pay off the 500 first at 200 +24 a month thats 2 1/4 months, with and extra 125 (*probably a bit more cause I think the 500 final pay off total will be less) going towards the 900 on that 3rd month
CC2: month 3 would be 125 left over + 31 = 156
month 4,5,6, payments would be the 200+31+24=255 (sub total would be 765 + 156 from month 3 total 921)
7 you pay off the 900 it should be less than 55 (with the interest) the left over 200 (and possibley more) goes to the orthoORTHO
month 1-7 pay 21, then add in the left over 200 from the CC payoffs 147 + 200 left over is 347 paid toward bill (leaves you with ~1255 O/S
now you are paying
8,9,10,11 payments would be the 255 from the 2 cc and the 21 from ortho =276 (sub total 1104 +347 = ~1450 towards bill …about 150 O/S)
month 12 payoff should be around 156 with 120 to go into emergency fund
month 13-15 continue to put the 276 into emergency fund and you should have about 670 in savingsRia
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January 28, 2009 at 7:54 am #412772
HSLINKS
HOUSE: it makes sense to hold off till you get the debt down for a couple of reasons
Unless he is guaranteed a job in this area he might have to move to another area for work after retirement
Ria
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January 28, 2009 at 11:43 am #412803
jaime
I had some of the same questions. Great post:)
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January 28, 2009 at 6:58 pm #412892
naturalmommy
hslinks;104471 wrote:natural mommy,
i think that this means you will pay off ortho in about 8 months then the additional 7 for the other CC – total 15 months ishAlternative: This will get the interest off sooner and I believe would be shorter time 12 months (*if my math is correct) & have about 670 in savings by end of month 15
Not sure what the min payment would be for the ortho , hopefully you can do 21
CC2: month 3 would be 125 left over + 31 = 156
month 4,5,6, payments would be the 200+31+24=255 (sub total would be 765 + 156 from month 3 total 921)
7 you pay off the 900 it should be less than 55 (with the interest) the left over 200 (and possibley more) goes to the orthoORTHO
month 1-7 pay 21, then add in the left over 200 from the CC payoffs 147 + 200 left over is 347 paid toward bill (leaves you with ~1255 O/S
now you are paying
8,9,10,11 payments would be the 255 from the 2 cc and the 21 from ortho =276 (sub total 1104 +347 = ~1450 towards bill …about 150 O/S)
month 12 payoff should be around 156 with 120 to go into emergency fund
month 13-15 continue to put the 276 into emergency fund and you should have about 670 in savingshope this makes sense
Ria- *woops* I forgot to clarify Im getting a bonus of $1100 in March and my taxes back in Feb. Ill have the ortho paid in Feb/march.
thanks so much for your math…
Its a tough call when you have 1 lump sum coming to us at once..
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