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letmebedebtfree

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How to tackle this debt?
I am a college student and I have a few bills that have gotten behind. Two of my accounts closed, because I couldn't make the entire monthly payment and the interest rates kept piling on. I still have two other accounts that I have been able to keep afloat. I have been reading and researching the best approaches to paying off my debt and raising my score.

I know that I should tackle on of my closed account because it continues to charge me late fees.

Here's my strategy, please give me any input that you guys may think will help me out.

Here's my situation. We'll label my accounts with the letters: A, B, C, D, E, and F.

Accounts ABC are still current (open) and account A is a utility. Account A is always paid, and if I have to ask for an extension, I am granted without any penalties.

Account B has a balance of $250, with a minimum of $20 per month ($19.98).

Account C has a balance of $484, with a minimum of $50 per month (49.98).
I recently missed a payment on Account C due to medical expenses and got a small ($4.98) fee added to my account.

My strategy is to pay two months for both accounts B and C.

Accounts D are student loans. They are in hibernation, but I pay the interest on the unsubsidized on and on my parent plus loan. Those, I strive never to miss a payment or if I do, I try to pay them in a lump (like three months, etc). These don't affect my score yet, but I want to stay on top of them so when I do start making payments on them, they go towards the amount and not the interest.

Accounts E and F are the closed accounts. These are the ones I'm struggling with. I once had them paid down, but, I purchased something and the payments continued to get get further behind.

It's been bugging me whether or not I should pay off the closed accounts since they are the highest balance or should I use the tactic of paying as much down and continuing to pay the monthly notes until it is paid off.

I just found out this morning that with account B, I actually have a suspension notice for three months (meaning, I can opt to not pay the monthly note for three months without any penalties or fees, but I must pay on that fourth month). I have been thinking of taking the $60 plus another $200 to put on the account with the highest debt to kick start the paying off. I have calculated that if I can pay $300 down and then $150 for three months, it would be paid off.

Do you think I should use this tactic for about of my closed accounts and then focus on paying down my opened accounts.

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You are welcome, friend! Good luck with your payments and feel free to ask questions. I hear you well. It irks when some one says "pay back, pay back" on the name of suggestions. In your head you say "I know that! tell me how!"

:)

Reply by
letmebedebtfree

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As promised, here is an update.

I have managed to pay all of the debt for account B off. (Sigh of relief) No more harrasing calls at 9 o'clock at night or on the weekends and holidays from them. 

Account see is now back in good graces and I have credit on that account, which I am not using! (Yay me!)  I will have this account paid off completely By December as I am paying twice the recommended amount and trying to cut those interest fees down. 

The closed accounts are still there. I have been receiving calls from law offices, although a financial advisor said that the best thing to do is to ignore them and only talk to them when I'm ready to because they will try to pressure me into taking action. 

My credit score has gone up 50 points since July. I know it isn't much, but I'm working on it. 

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Your situation is bit tricky, but don't stress out much. I too have mutliple accounts with balances (not any closed accounts though), and I very well understand your stress. There are many ways to go for it, but I think the most effective is to follow the snowball. Here are few points:

1. TACKLE ONE DEBT AT A TIME: Focus on paying one and keep paying the minimum required on all other accounts. Do not worry about the balances or interest rates at this time. You will have to pay interest, but there is nothing you can do for it for a while.

2. ATTACK THE LOWEST BALANCE FIRST: In your case, you can get away with account B for three months. Use all that money to pay your account C for these three months.

3. WORRY ABOUT THE CLOSED ACCOUNTS LATER: I know they have higher balances, but as they are closed, what can you do? IMO, you stressing out too much about them won't help, because the balances will take much longer to come down even with aggressive payments.

In summary, pay your low balances and free yourself from those "minimum payments" on multiple accounts. They can then be used to pay off your larger balances. Let me know if you have any further questions.

Reply by
letmebedebtfree

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Thank you so much. I had always had that nagging feeling about the closed accounts. I never really knew how to handle them. I had talked to a few people but they keep beating the poor dead horse about paying eveerything off. I would thank them but, in my head there would be "duh" with legs running around.  

I'm glad I finally decided to join this site.

I will keep you updated on my progress. 

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