A few weeks ago, I wrote a post about the three major debt payoff methods and my struggle to choose one. After reading all of your amazing comments, I have a better idea of what I want to do. So thank you much! Red Debted Stepchild seems to have a good mix of emotional and rational readers because I got a lot of different opinions, but the overwhelming response was AS LONG AS I’M PAYING IT OFF IT WILL EVENTUALLY BE GONE. This is very true and makes me happy.
In the end, Kasey of Debt Perception and Kathleen of Frugal Portland truly helped me make up my mind. Kasey is using all three methods in some way – why didn’t I think of that? – and Kathleen suggested taking out the debt that I am most ashamed of first. So here is my debt payoff hybrid method.
1) Debt tsunami/debt snowball – take out the three credit card balances. These include Chase, my furniture, and Discover. When I wrote the article, I identified Chase as my most hated debt. Three weeks later it is also my smallest debt so I am snowballing the shit out of these cards while also killing the card with the highest emotional impact first. Two birds and all that.
2) Debt tsunami – flip my car right-side up. I currently owe more than she’s worth due to a warranty on steroids that we agreed to after being burned by so many terrible cars.
3) Highest interest rate/debt snowball – take out my student loans in order of interest rate AND amount. Some of my loans are smallish while others are largish. So I will pay off my smallish loans in order of interest rate then move to the largish loans and pay those in order of interest rate. It sounds a little confusing, but it totally makes sense to me. And we all know how much I like complicated systems…
4) Leftovers – take out my car loan. I love my car* so I hate this loan the least. However, I don’t like owing more than the blue book value, hence #2.
These are my debt payoff plans. I reserve the right to change my mind at any time and I probably will. But it’s a plan and I love plans.
In a perfect world, my debts would be my only focus. But that would be WAY too boring. This summer is coming with a bunch of extra (but also expected) expenses, from clothing (need) to a new laptop (need – will explain later) to a rather pricey move (want – will also explain later). Despite all of this, the debt WILL keep going down. It just might go down more slowly than usual for a few months.
I hope y’all have a great weekend! I am being forced against my will going to a baby shower this weekend with my lovely mother and also catching up on some writing. Get prepared for narcissism overload next week, as Monday will be my monthly update** and Wednesday is my birthday. You should get me a cake – preferably of the red velvet, spice, or cheese variety. Also, I’m hiring a royal cake taster so please don’t try to poison me, crazy stalkers.
*Her name is Lucy because I am actually a 16-year-old teeny-bopper who names her car. Deal with it. Plus, I like saying “I love Lucy!” My previous cars included Max, the Ghetto Beast, no name, & T. Yes, this is my fifth car. Yes, I’ve been driving less than 8 years.
**Someone got another staff writing gig :).
[Image from BuzzFeed]