I hate debt...

July 18, 2005 6:14 PM

I just graduated college with a little debt. I have large amount of money coming my way next year. How do I keep payments and interest at a minimum and just pay everything off next year?

Specifically... I have about $4300 in credit card debt and a $33,000 trust fund that I aquire on my next birthday in June. I'm paying almost $200 a month to service these credit cards... which is keeping me from doing some things I want to do, like getting out of my hometown and moving to Austin with a friend. The bills kinda put a hamper on the care-free lifestyle I want to squeeze out till the bitter end when I quit and go to grad school. Any suggestions for what I could do? The best I found is a revolving loan at my credit union... $140/min and 12% APR(!).

posted by trinarian to Work & Money (5 answers total)

Assuming your credit is good, credit cards frequently offer very attractive rates for initial balance transfers to convince you to open an account. I've seen things as good as 0% for the first year, though that might have been a pre-screened offer. Just a quick poke around reveals that American Express offers 5% for the life of the balance on initial balance transfers on their Blue card.

Of course, only do this is you're positive you can make the minimum payments on time, otherwise rates instantly go into the stratosphere.
posted by trevyn at 7:06 PM on July 18, 2005

Best answer: about a year i go i was in a similar debt situation, except about $2000 worse. as a student, i decided that it was worth it to sacrifice a semester of school, and work my butt off for 4 months. sure, it was rough and i didn't have much of a life, but i tell ya, i don't regret doing it that way at all. i live without that constant monkey of debt on my back, and can focus on putting my money where it matters. true, you have a huge wad of cash coming your way in a year, but my advice to you would be to act as if you DON'T have that. if you work hard to eliminate your debt now, you can truly put that $33k to use when it truly is yours -- and you'll have learned the value of your work and probably appreciate the end result more.

just my two cents (no pun intended)

-quad
posted by quadrinary at 9:25 PM on July 18, 2005

I once read somewhere that the difference between financial misery and financial bliss is that if you earn $100/month and have $101 in bills, you have misery. If you have $99 in bills, you have bliss. The point wasn't the dollar figure, it was that if you spend less than you earn, you save the rest and are financially secure (over time).

So, if you want to live the care free lifestyle, without debt, you should cut down all your expenses so that you can pay more on the credit card. There is no easy way to do it. Bite the bullet, sacrifice some fun now for the reward of getting out of debt sooner.
posted by achmorrison at 9:36 PM on July 18, 2005

Of course, only do this is you're positive you can make the minimum payments on time, otherwise rates instantly go into the stratosphere.

Also, beware of increasingly common universal-default policies. You don't want all your cards to raise their rates as high as they can just because you're late with a single payment on one card.
posted by oaf at 11:12 PM on July 18, 2005

I'm late to the party here, but be aware that your minimum payments may increase before your windfall. I don't have time to google much now but here's a little more info at Credit Shack.
posted by Sorcia at 8:20 PM on July 20, 2005