I originally took out ,000 in student loans (,000 for undergrad and 41,000 for graduate school). My loans are now ,000 with interest because I took forbearance. I had a job that went from a salary of ,000 in 2005 to ,000 in 2010 due to the economy. I have a new job now and a part time job making a total of ,000 a year. I also have credit cards. I just paid 2 credit cards off. I have remaining credit cards in the amounts of 0, 0 and 90. I also have a private student loan from undergrad for 0. I also owe 00 from leasing a car and ,000 from a car that I have now. I owe 8,000 on my mortgage. This was all fine when I made ,000 but not so easy now. I made a dumb mistake by going back to school for my grad degree and leasing a car. How should I go about getting out of this debt now that my salary is higher? I have been using the strategy of paying off the lowest amount of debt first. So my plan would be to pay the 0 card, the 0 card, the 0 private student loan, the 00 car leasing debt, the 90 credit card, the ,000 car, the ,000 student loan and then the 8,000 mortgage in that order. I would pay the minimum payment on all of the bills but put extra money towards the rest of the bills in the order listed. I will be selling the house soon or renting it because it is becoming too small for my family. The new house will not cost as much due to the cheap prices that I can get in this flat economy. Is this a good method?
P.S. I have heard that you should pay off your bills according to the interest rate. I have not looked into this method because I just want all the small amounts of debt gone so I don’t have as many bills to pay. But just in case you need to know to help me:
Mortgage is at 4.5%
Student Loan is at 6.7%
Car is at 3.5%
End of lease cost of 00 is at 0% interest for the next 8 months (I have 8 more months to pay it off)
0 credit card is at 20% interest
0 credit card is at 24% interest
90 credit card is at 21% interest
0 private student loans is at 2% interest