Questions tagged [debt-reduction]

The act of paying off debts (either partially or completely). One may do this to lower or eliminate a monthly payment and regain control of one's personal finances. There are different ways to do this, but the most popular are based either on the total amount of each debt or on the interest rate. There are different arguments as to which one is better, but either is better than doing nothing but paying the minimums.

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200 votes
21 answers
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How smart is it to really be 100% debt free?

For the last 2 years, I have been trying hard to be debt free without affecting my personal cash flow. I am by no means a rich person, but I have a decent salary. I still have debt, specifically ...
Geo's user avatar
  • 5,825
69 votes
11 answers
20k views

How can I prepare for my US student debt?

I'm a student at Drexel University. Drexel is a notoriously expensive school, and I pay roughly $35,000/yr in tuition, after awards. What's more, it is a five-year school. Currently, I'm in my fourth ...
CretaZigman's user avatar
60 votes
12 answers
26k views

What should I do with $4,000 cash and High Interest Debt?

I'm receiving a $4,000 gift. I'm going to put $1,000 in an account. Next - with this gift I can pay off a credit card with a 23% APR or I can make a 15% dent in a 26% APR credit card. Do I pay off ...
Patti Reiss's user avatar
55 votes
17 answers
15k views

Why would anyone want to pay off their debts in a way other than "highest interest" first?

Looking at the math, it is clear to many people that, given a number of debts at different interest rates, if you are trying to eliminate your debt, you will pay less interest overall if you pay off ...
Ben Miller's user avatar
  • 115k
48 votes
10 answers
13k views

Is paying off your mortage a #1 personal finance priority?

Everyone always says and aims to "pay off my mortgage" But in the current climate of low interest rates is this really worth it? Should that money be put to use earning a higher yield? OR Does the ...
user37273's user avatar
  • 489
45 votes
11 answers
13k views

Should I take out a personal loan to pay off credit card debt?

My spouse and I have about 40K in credit card debt, in addition to a mortgage payment and student loans. We have been working hard to pay off this debt and have been moving in the right direction. ...
thumbtackthief's user avatar
43 votes
14 answers
12k views

Hypothetically, should I pay off the smaller + higher interest rate loan first, or the larger + higher absolute interest cost?

I have this hypothetical situation on my mind and I am not sure which is the best solution. Given: Loan 1: $340,000 at an interest rate of 1.69% per year Loan 2: $40,000 at an interest rate of 3.6% ...
user99451's user avatar
  • 441
37 votes
9 answers
12k views

Getting $10,000 and have $16,000 balance on two credit cards - How to allocate payments?

I'm getting a chunk of money - $10,000. I have 2 credit cards, each with $8,000 on them. Both have the same interest rate. Should I put $5,000 toward each of them? This way, would my monthly bills ...
jenna's user avatar
  • 371
37 votes
6 answers
50k views

Should I pay an extra $100 every month on my mortgage or pay $1200 extra every year at the beginning of the year?

I can pay $1200 extra once a year or $100 every month - which is better? The first one does sound better, but for a 30 year mortgage, is it that significant? Say the mortgage is for $200,000. ...
Anonyms's user avatar
  • 371
35 votes
13 answers
8k views

Why might it be advisable to keep student debt vs. paying it off quickly?

As of a couple weeks ago, I paid off all of my student debt. Hooray... But I have a friend named A who has a friend named B who is a financial advisor (a young so therefore perhaps ignorantly ...
Millie Smith's user avatar
31 votes
13 answers
9k views

Do I pay a zero % loan before another to clear both loans faster?

I have $11,000 to put toward one of my three loans. I think I should pay off the 0% car loan and then in two months it will be zero and I can apply that $635 to the 2.5 % car loan and pay it down ...
AllenH's user avatar
  • 335
28 votes
5 answers
6k views

What method do I use to pay current expenses while paying off credit card debt?

I’m hoping you can help me with a question that seems very hard to google for some reason. I have $20K in debt on 4 cards, and I have set up a plan to pay off the deferred card on time, and the ...
Chelsea 's user avatar
27 votes
5 answers
7k views

Multiple loans, multiple payers - how to snowball fairly

My brother and I both have a large sum of student loan debt. I have more than he does and my interest rates are slightly larger as well. We are both attempting to snowball our debt separately. It ...
stu's user avatar
  • 373
26 votes
8 answers
11k views

To pay off a student loan, should I save up a lump sum payoff payment or pay extra each month?

I am a new college graduate with a student loan of $17k at 6.8% interest. The monthly minimum payment due is $193. I have been paying the minimum amount, and then taking that same amount and placing ...
Mike M's user avatar
  • 363
26 votes
6 answers
3k views

I've often heard of the "snowball" method for paying off credit card debt. How does it work?

How does the "snowball" method of paying off credit card debt work? In what ways is it superior over other ways of reducing one's debt?
user avatar
26 votes
6 answers
1k views

Does it make any sense to directly contribute to reducing the US national debt?

As an American citizen, does it make any financial sense to donate money in hopes of helping to reduce the US national debt? Thanks.
Latency's user avatar
  • 263
22 votes
2 answers
8k views

Using fiancée's money to pay off my student debt

I have a student loan in my name and I just got engaged (Yay!) about 2 months ago. My fiancée has been saving up and is really interested in helping us get out of debt before the wedding. I think we ...
Phil's user avatar
  • 823
22 votes
3 answers
6k views

Is there any downside to paying off a mortage shortly before moving?

I recently purchased a house for $125k, currently the mortgage balance is $100k, but value increased during COVID to ~$210k. I am expecting to earn a lump sum of money, enough to pay off the mortgage ...
Village's user avatar
  • 2,787
21 votes
4 answers
10k views

HELOC debt is 2x my mortgage, help [duplicate]

My home equity line of credit (HELOC) amount owed has now grown to where it is approximately double the amount remaining on my mortgage and the interest payments are killing me. I have no other debt. ...
Debt-ridden Dude's user avatar
21 votes
8 answers
7k views

Strategy to pay off revolving debt while building reserve savings fund?

We currently have about $16K cash. I'd like to have $30-35K+ for a ~6 month reserve. This will be a "single giant reserve fund" that will pay for large and/or unplanned expenses, frivolities like ...
David Z's user avatar
  • 360
21 votes
6 answers
16k views

Should I pay off my 50K of student loans as quickly as possible, or steadily? Why?

I was an idiot in college. I basically just used student loans and got very few grants. I also spent way too much time in there. I now have two bachelor's degrees and a master's degree. About 7 ...
SoftwareSavant's user avatar
20 votes
3 answers
24k views

Should I pay off zero interest debt early?

My cash reserves are around $11k, including an emergency fund of about a month and a half, and I budget rigorously. The only debt I have is $7k at zero interest, paid at $300/month, and it's from a ...
Paul's user avatar
  • 467
19 votes
4 answers
7k views

Paying Off Student Loans Early

I currently owe $34,558.00 in student loans ($31,000.00 principal + $3,601.83 unpaid interest accrued so far) with an average interest rate of 4.877%. I just started working full time ($70,000 GAI) ...
Josh Broadhurst's user avatar
18 votes
8 answers
7k views

Should I withdraw from my IRA to pay off my credit card debt?

Should I withdraw $45,000 from my IRA to pay off credit card debt? I am 63 years old. Because of a change in employment status for the last 4 years I went from full time to part time. In order to ...
Jeanie's user avatar
  • 189
18 votes
10 answers
5k views

Snowball debt or pay off a large amount?

I recently received a large amount of money, well large in my eyes, around 5000 dollars. I have the following cards: $10619 citi card ($234.35/month) $2500 Best Buy Card - deferred interest ...
Xaisoft's user avatar
  • 578
18 votes
8 answers
2k views

Paying Off Debt: When CC Companies Won't Reduce APR

For the past two years I've been living, for the first time, under the weighty, grey cloud of credit card debt. Foolish use of personal credit cards to fund asset purchases for an LLC have resulted in ...
user10127's user avatar
  • 181
17 votes
8 answers
6k views

I have $3500 in Rollover IRA. Should I withdraw it early and pay off my credit card debt?

I have been investing a healthy amount in my current 401k with no plan to withdraw it early. I have $3,500 in a rollover IRA which has been sitting in there for about 4 years and I have done nothing ...
Gerry's user avatar
  • 171
17 votes
8 answers
4k views

Trying to lower my credit card APR; how to know what I should ask for?

I have a B of A Cash Rewards credit card that I want to have the APR lowered. It currently hovers at 20.49%. I've been a B of A customer since 2007, I've had the credit card since 2012. From their ...
John Doe's user avatar
  • 319
17 votes
6 answers
2k views

Should I pay off my student loan before buying a house?

Should I pay off my student loan before buying a house?
Sam Erde's user avatar
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16 votes
8 answers
2k views

At what interest rate should debt be used as a tool?

I know people love to preach the merits of being 100% debt-free, but when used intelligently, debt can be a powerful tool. All else equal, if I have debt at an interest rate of say 1% and have an ...
Michael McGowan's user avatar
15 votes
8 answers
7k views

5 credit accounts, from $1750 to $4000, all above 90% utilization. Better to pay $500 on all 5, or pay one off completely for credit score?

I have 5 cards acquired in a misbegotten, spendthrifty youth. Utilization: Account 1: $1600 of $1600 Account 2: $1500 of $1500 Account 3: $1200 of $1750 Account 4: $2900 of $3000 Account 5: $4000 ...
Jeff H.'s user avatar
  • 193
15 votes
6 answers
11k views

Should I use IRA money to pay down my student loans?

I have just over $140,000 in consolidated student loan debt with a fixed interest rate of 5.75% on an income-based payment plan. My current and previous employers qualify for the Loan Forgiveness ...
Janelle's user avatar
  • 159
14 votes
10 answers
3k views

Should I pay off the credit cards now or do the monthly payments thing?

I have 3 credit cards with a total balance of about $36k. Two of the cards are at 2% and the last one is at 0%. With the current payment structure, I'll be debt free in 25 months. I recently came ...
NeedAdvice's user avatar
  • 3,817
13 votes
5 answers
5k views

Incremental payoff vs lump sum

I have $12 000 in student loan debt at 6.5% interest. Currently my payments are in the ballpark of $150 per month. I have an automatic transfer to a high interest savings account with Tangerine set ...
JacobPariseau's user avatar
13 votes
3 answers
3k views

Is it wise to pay off mortgage with 401k?

I've been considering paying off my mortgage with my 401k balance. Some particulars, I'm in WA state in the US, and I'll turn 60 in about a week. I have enough in my 401k with my current employer to ...
delliottg's user avatar
  • 595
13 votes
9 answers
5k views

Should I increase my 401(k) contributions, or increase my mortgage payments

I have about $150k remaining to pay on my mortgage. There are 7 years left at a 3% interest rate, then after that the rate goes variable and increases to about 10%+. There's no penalty for paying the ...
Jonathan Hartley's user avatar
13 votes
7 answers
2k views

Is it OK to use a credit card on zero-interest to pay some other credit cards with higher-interest?

I was reading up on What is the difference between "good debt" vs. "bad debt"? and it says borrowing money from a credit card is a bad-debt. So, I was wondering if the credit card ...
user avatar
13 votes
2 answers
5k views

Why don't companies buy back their own (cut-price) debt?

A thought occurred to me today. Glencore's debt is trading at about 70% of face-value. If you're Glencore, what's to stop you buying that debt yourself and pocketing the difference? In particular, ...
Kaz's user avatar
  • 2,489
12 votes
7 answers
775 views

Are my monthly commited expenses out of whack?

Okay, my wife and I struggle with our finances and we are trying to get them in order. My net pay is approx $1300 every two weeks (my wife does not work) That is after health insurance premiums ...
rodey's user avatar
  • 275
12 votes
6 answers
3k views

Should I use short term loans to pay for student loans?

I have about $30k in student loans. I graduated last May and have a steady income. Now, my company's credit union offers $3.5k loans at 3% to be repaid over a year (they automatically deduct from my ...
TsSkTo's user avatar
  • 347
12 votes
5 answers
5k views

Paying extra on a mortgage. How much can I save? [duplicate]

Can I pay $12,000 extra once a year or $1000 every month - which option is better? The first option does sound better, but for a 30 year mortgage, is it that significant? The mortgage is for $527,...
Barb's user avatar
  • 121
11 votes
2 answers
3k views

How can I determine if a debt consolidation offer is real or a scam?

A friend of mine recently attempted to go though debt consolidation. He received a phone call and was offered really good terms to consolidate his current debts. A promise was made that the company ...
user avatar
9 votes
4 answers
3k views

In Australia, how to battle credit card debt?

I have $18K in credit card debt. What are my options in tackling this? Every month I am left with no extra money to pay anything more than minimum payment required (car, rent, another personal loan, ...
iamxtoz's user avatar
  • 133
9 votes
7 answers
3k views

How should I pay off my private student loans that have a lot of restrictions?

I have numerous private student loans, with amounts and interest rates like this: $30,000 7% 25,000 7% 10,000 7% 5,000 6% 4,000 5% My loan provider told me I have two options. ...
Michael A's user avatar
  • 1,948
9 votes
6 answers
23k views

mortgage vs car loan vs invest extra cash?

I received a good bonus this year and am trying to figure out the best way to use it. I have no credit card or student debt, maintain an emergency fund, and am maxing out tax advantaged retirement ...
Amie Williams's user avatar
9 votes
4 answers
209 views

Credit Card Transfer/Payoff Advice

I have a credit card that is just about maxed out. I'm trying to get into financial health but the purchase interest charges are killing me and it's hard to get ahead. My cash flow is also terrible ...
Britr8's user avatar
  • 91
9 votes
2 answers
456 views

How much is enough to save as a rainy-day fund before I start plugging my higher-interest student loans?

Typically, what is considered realistic? 6 months expenses? A year? I understand this is more of an "opinion" question but I am still curious what people think is a responsible buffer (in the event of ...
IAmBatman's user avatar
  • 365
8 votes
6 answers
562 views

Should I prioritize paying down my higher interest debt over building an emergency fund, or vice-versa?

I have a debt of $15,000 at a yearly interest rate of 9%, which can be paid within 5 years. Would it be better for me to: Build first the emergency fund (e.g. liquidity for 6 months' expenses ...
user12701's user avatar
8 votes
5 answers
998 views

How to pay down credit card debt

Last year I was at a good university and I decided to quit my job and take on a huge load of classes in order to finish in two semesters. I have a wife and a child and the student loans are based off ...
user44572's user avatar
8 votes
3 answers
1k views

Missing opportunity cost of mortgage prepayment

What other opportunity costs of paying off a mortgage early might I be missing? I am in year 2 of a 15 year mortgage at 2.875% with no other consumer debt. I have a 8 month emergency fund, maxing out ...
InbetweenWeekends's user avatar