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Payoff tips for $15,000 in wedding card charges

Erica Sandberg

August 4, 2015

QHi Erica,

I got married in June in a fairytale wedding and we put $15,000 on three cards for it. The rest we paid for with family help and some savings. One card is maxed out, and the other two are close. I hate that we are in debt so soon into our married lives. What is the fastest way to pay all this off? –Kaylie

ADear Kaylie,

One of the primary benefits of having a credit card (or two or three) is that you can buy what you want to possess now, but pay over time. This way you won't need all the cash up front. Delete the entire balance quickly and the finance fees can be reasonable.

For example, if the average interest rate on the cards you have is 11 percent and you send the creditors regular installments of about $3,836, you'll be out of debt in four months, costing an extra $345 in interest. Not too bad, right? Well, it would be if you stretched the arrangement out over two years at $699 a month, as the fees would top out at about $1,778. A higher APR — say, 21 percent — would create an even worse scenario, at $3,499 in interest costs! Ask Erica

Because you don't mention what your income and expenses are, it's impossible for me to know what fixed payments are realistic, but you can determine that by developing an accurate cash flow statement — aka, a budget. List how much money you and your husband have coming in every month, then subtract what you need to cover your expenses. Whatever sum remains should be applied to your liabilities.

Here's another example. Assuming your combined net income (take home pay after all deductions) is $5,000, and your expenses are $3,200. You'll have $1,800 for your credit card payments. With a payoff calculator to input the interest rates your creditors are charging, you'll immediately see how long it will take to be in the clear.

You may find that the time frame is too long and expensive for comfort, so if you can't augment paychecks or slim spending (both sensible but not always doable fixes), here are a couple of other ways to speed up the process:

  • Transfer balances to a promotional rate card. Maybe the interest rate you have on your cards does average around 21 percent. That's high for a debt load so large, as the financing fees will eat up a large portion of your payment, slowing the repayment process down. However, if you were to transfer the balance to a card offering 0 percent APR for 12 months and make regular payments of $1,250, you'll save approximately $1,540 in fees — and be debt free in a year.
  • Make a preliminary dent in the debt. Let's say you had been watching too many episodes of “Say Yes to the Dress,” and succumbed to the idea that $8,000 for a gown is normal. Now what are you going to do with it? If you'll just keep it in storage, consider selling it. Estimate what it may be worth on sites like preownedWeddingDresses.com. If you can get $2,500 for it (designer duds retain their value more than off-label), apply the proceeds to what you owe, lowering your balance to $12,500. That's just one example of an asset you can use, though. Every dollar you shave off today is less you have to repay tomorrow, so scan your surroundings. Old laptops, bicycles, ugly vases you received that were not on your wedding registry…

Whichever way you go about lowering the interest rate (you can also appeal to your current credit card companies and ask for a reduced APR) and balance while increasing the payments, avoid charging while you're in debt-deletion mode. Instead, use your debit card during this time. After you're in the black, you can resume spending with them. Just pay on time and keep the debt to zero or close to it.

Now you're ready to take your vows for a prosperous life together. Mazel tov!

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