Task 2: Tackling Debt
The company knows that one thing that many Americans need is a way to track paying off credit card debt. They put together a hypothetical user profile and gathered data from a CPA on how this consumer could use two popular debt repayment methods to conquer their credit card debt. The hypothetical customer is named Mia and she has four different credit cards that she needs to pay off.
| Credit Card Name | Starting Statement Balance | Interest Rate | Minimum Monthly Payment |
|---|---|---|---|
| Hotel Card | $1,250 | 20% | $50 |
| Airline Card | $2,000 | 22% | $50 |
| Bank Card 1 | $1,000 | 15% | $50 |
| Bank Card 2 | $1,750 | 18% | $50 |
The company wanted to put together a debt repayment plan for Mia under the following assumptions:
- Because she lives with her parents and they are covering some of her expenses, Mia can dedicate $1,000 out of her $2,500 a month salary to debt repayment.
- If any of her debt grows to over $10,000, Mia’s parents are going to cover the majority of her expenses so she can put $2,000 a month towards repaying her credit card debt.
This repayment plan for the hypothetical Mia is supposed to help the company put together an effective debt repayment portion of their app. However, they want you to run an EDA and clean the debt repayment plan so they can move forward with the app.
The debt repayment workbook has a spreadsheet for the debt snowball method and the debt avalanche method. The debt snowball involves paying the minimum payment on each credit card and putting the extra of her allocated debt payment towards the debt with the smallest balance. Once that is paid off, she would do the same to the remaining credit card with the smallest balance and so on until she is done paying her debts. The debt avalanche method involves her paying the minimum payment on each credit card and putting the extra towards the credit card with the highest interest rate until that is paid off and then she moves on to the next highest interest rate.
Making sure that you are working on your copy of the debt repayment workbook, perform an EDA and clean the data, answering the questions in the final report document.