Paying down $0.5 million in debt

b0mbrman said:   cheapdad00 said:   b0mbrman said:   Just made another $1025 payment to my credit card debt -- the Navy Federal Visa (currently at 0%).

This puts me at 107% of my 2013 goal to pay off $21,000 worth of credit card debt in 2013?

OP, haven't read the entire thread, but you seem to be progressing well towards your goal. Keep up the good work. One question, why did you payoff any more than the minimum of the 0% debt? Wouldn't you be better off paying down student loans with that money or rate chasing rewards checking accounts to earn promotional interest amounts?

Yeah, I had that feeling even as I was making the payment.

My instinct is to switch my payments toward the higher interest rate (7.9%) student loan now, before the deferral ends, then try to BT the Navy FCU balance to another 0%, no-fee card when it expires in January. How does that sound?

The one variable that could make this make less sense would be if I'd be more likely to get one solid BT card while holding a balance.

A year is a long time for another 12 month 0%/$0 Fee BT offer to popup. And even if one doesn't, there are tons of with 12 month APR and 2-4% fees(some with caps)! Let the 0% ride and make the minimum payments at Navy Fed. Pay down your debts that are charging you real amounts of interest TODAY.

Crazytree said:   All I'm going to add to this thread is that it is hard to convince underwriters that carrying half a mil in CC debt is okay when applying for a home loan.

Did you read the first post? OP doesn't have half a million in CC debt - it is a sum of everything.

Crazytree said:   All I'm going to add to this thread is that it is hard to convince underwriters that carrying half a mil in CC debt is okay when applying for a home loan.

I should have been clearer; it's not all credit card debt.

Here's a visualization of the debt profile: http://i35.tinypic.com/b8kad5.jpg

b0mbrman said:   So I've decided I'm going to tackle the bear

Alright team. With my credit card debt either paid off or sitting at 0% for the next few months, I think it makes the most sense to get an early start on paying off my student loan debt. I'm in the just-graduated deferment but it's still accruing interest.

Any thoughts on what I should do before and as I start this adventure?

Massive App-O-Rama where you get all the student loan debt transferred to credit cards. Then strategic bankruptcy to wipe out most of it (may take a few years to age the debt). You may want to sort your house situation out before then. Can you move into/sell one of your investment properties. Never mind, having those may help muddy the waters of where the credit card balances came from.

Just kidding. Pay off higher interest before lower interest. Any opportunities of picking up a job that will write off student loan balances after a certain period of time?

b0mbrman said:   cheapdad00 said:   b0mbrman said:   So I've decided I'm going to tackle the bear

Alright team. With my credit card debt either paid off or sitting at 0% for the next few months, I think it makes the most sense to get an early start on paying off my student loan debt. I'm in the just-graduated deferment but it's still accruing interest.

Any thoughts on what I should do before and as I start this adventure?

Massive App-O-Rama where you get all the student loan debt transferred to credit cards. Then strategic bankruptcy to wipe out most of it (may take a few years to age the debt). You may want to sort your house situation out before then. Can you move into/sell one of your investment properties. Never mind, having those may help muddy the waters of where the credit card balances came from.

Just kidding. Pay off higher interest before lower interest. Any opportunities of picking up a job that will write off student loan balances after a certain period of time?

Woah. You had me for a second.

My current paid for my last semester. I don't know of any that would have paid for more than one year's worth of school.

I have considered the idea of a federal job for a couple reasons:

1. Some give up to a few hundred per month in student loan repayment
   
2. Public Service Loan Forgiveness would wipe out whatever remaining balance I have after ten years

Also, the student loan repayment increases your taxable income, which is taxed, and decreases you PSLF benefit 10 cents on the dollar.

elektronic said:   b0mbrman said:   Woah. You had me for a second.

My current paid for my last semester. I don't know of any that would have paid for more than one year's worth of school.

I have considered the idea of a federal job for a couple reasons:

1. Some give up to a few hundred per month in student loan repayment
   
2. Public Service Loan Forgiveness would wipe out whatever remaining balance I have after ten years

Didn't think about this. Thanks

One question though: if it increased my AGI by the amount forgiven, wouldn't it discount its value by my marginal rate? Where is the 10% from?

b0mbrman said:   elektronic said:   b0mbrman said:   Woah. You had me for a second.

My current paid for my last semester. I don't know of any that would have paid for more than one year's worth of school.

I have considered the idea of a federal job for a couple reasons:

1. Some give up to a few hundred per month in student loan repayment
   
2. Public Service Loan Forgiveness would wipe out whatever remaining balance I have after ten years

Two separate things. If the federal job offers student loan repayment, it is taxable as income. This increases your AGI and will increase your income based repayment by 10% of the student loan repayment amount, which decreases the amount that is forgiven after 10 years. So the actual benefit of the federal job student loan repayment = (repayment - payroll tax - marginal federal tax rate - marginal state rate)*.90. The value to you ends up being less than 50 cents on the dollar.

If you stay 10 years in a public service job, the amount forgiven is NOT taxable income (currently).

If you do a 25 (20?) year repayment in a private job the amount forgiven is taxable income.

A side note, not about paying off debt: I maxed out my 2013 Roth IRA ($5,500) over at Vanguard as of today.

[Edit] I guess this is related to paying off debt in the sense that I wouldn't want to sacrifice this to paying off debt and that this could be used as part of an extreme emergency fund, as someone mentioned earlier in the thread.

Woah, you can change your handle?? Learn something new everyday...

Haha I'm like who is this dbag thread capping... then I figured it out.

Venturion said:   debtblag said:   A note about rounding: I round to the nearest $25, using the inelegant Excel function Round(4*x,-2)/4. This, combined with daily compounded student loan interest, will sometimes make my math look funny...like your mom... A note about being a big boy: you can use whole numbers without rounding. You've shown in this thread that you don't need math tricks to achieve your goals. If it provides a psychological boost, then rounddown(x,-2) away.

Oh, on my own spreadsheets, I don't even round

It's more about readability for you guys. Readability is also the reason I don't copy over lots of other things I include on the blog like my experiments with a homemade Gatorade replacement, how much money I save by using bar soap instead of liquid soap, or my low-cost lentil recipes

OK, I know I said I wouldn't talk about it, but I finally did the math on how much I'm actually saving when I switched from body wash and liquid hand soap to bar soap for my Blogspot -- it's almost $100 per year!

Sure, that difference is a rounding error when compared to the massive size of my debt, but I like to think that all the little changes add up

How does one even spend $100 per year on body wash? At $4 per bottle that's more than two bottles a month. I think the problem was you were using way too much body wash

chantspel said:   Go a step further: soap is for wimps! With your new outlook and resolve you should be able to scare germs off your hands

Ha ha. I'm trying not to be too disgusting

I did give up shaving using disposables though. No shaving gel, no cartridges, no aftershave...

Not financy, but has to do with one of the four main goals so... I switched the blog about paying down my debt to a top-level domain yesterday. Tough to feel bad about it for $6 a month at Liquid Squid

Oh, also based on advice given here, I've shrunk my emergency fund down to two months at current spending levels -- $3800 per month which which includes the $2200+ per month toward debt payment. I figure that if I lose my job, I can slow down debt repayment, but it makes more sense to pay a lot now rather than build up an emergency fund to keep paying debt during unemployment later.

MoneyOCD said:   So where you stand rignt now?
You stop updating progress on the first page since 4/22.

ETA: found your blag still not really clear - you started with $471k debt - what it is right now?

Ah, did a big update this morning over there actually. I was afraid people were getting annoyed with the one-off updates on payments so I'll switch to monthly payments talk and then toss in other developments as they happen

In May, I stopped paying more than the absolute minimum on my Navy FCU balance transfer, and switched to making big payments to my student loans -- $2211.50 to my 7.9% interest Grad PLUS loan and $91.12 to my 3.3% interest consolidated loan.

Here's the breakdown at this moment:

$ 12,500 Credit cards (at 0%)
$130,300 Student loans (at 7.9%, 6.9%, & 3.3%)
$306,300 Mortgages (at 7.5% & 3.3%)
--------
$449,100 Total

That's $21,900 less than I started the year with and with better interest rates on a couple of them!

So the Bank of America mortgage refinance snag: I was most of the way through a HARP refinance with BofA when crazy tempests descended (actually, pretty moderate winds) upon the rental property, leaving me with just over $100 in damage. BofA suspended the refinance process while I made the repairs, but in the week it took to get an appointment to complete the repairs, they sold my loan to Green Tree Servicing. I was told by both BofA and GT Servicing that they cannot re-start the HARP application process. This wouldn't be terrible if it took the 5-10 days they said it would take to make the transfer, but it's been a month.

I'm super-annoyed right now. Every extra day that the transfer takes is a day that I'm at 7.5% instead of the 4%ish I'd be at with a HARP refinance. With my current balance, that's about $400 a month.

Gah!!!

theeipi said:   you summed it up right there. every month is a month they earn 7.5% instead of 4%. With your current balance, that's about $400 a month. they will continue to slow and delay. i was in a similar situation and it took 6 months to close.

My word! Six months?! That's almost criminal.

Was there something you did to finally get it resolved?

13 points on your credit score wont make or break you, especially if you already have the refinance rate locked in.
you should pay off the highest interest first. if you want to play around with cc rewards, 13 points won't be a deal breaker.

Did you research if you were able to do a balanace transfer of the student loans to the chase slate 0%? (more more to the zero %)

Right now, you are paying roughly $8k/year in interest on the student loans. If you were able to push them to 0%, that would save you some money.

As for your question, keep the original strategy. Min payments on the 0%, and pay off the higher interest balances. That will overall save you more money. At the end of the year, when your promo rate increases, then do another balance transfer to a 0%. Psycologically, stick with the spreadsheet, not the balances on the 0% cards. You can still dabble with the credit card rewards --I'd suggest 1 at a time vice a full app-o-rama, that way you can make the spending requirements.