I had a question regarding which of my debts that I should pay on with a bit of extra money that I have. I have $1,800 dollars right now that I can put towards some bills, I was wondering if I should put it towards my high interest car loan or my credit cards. The car loan has a balance of 10k, and the credit cards are sitting at about 2k. The car loan is at 21%, the credit cards are lower, ranging from 12.9 to 19.8% I will have about 4k in June that I will put towards the car, but was wondering if I should put this money towards that as well? I know if I pay down the credit cards, it will be a better ratio, but I really do not care about scores right now, and I will get those paid off fairly soon anyways.. What do you guys think?
This is just an opinionâ?¦ I think you should you should pay off your CCâ??s, $1800 really would make a dent in that $10K right now. But if you pay off that $2K and only charge what you can pay off in the course of a month that extra money not paying interest put toward your car payment monthly. Then in June apply the 4K to the car. Remember this is just an opinion. Good Luck
RULE #1 - PAY THE DEBT WITH HIGHEST INTEREST RATE FIRST! I would pay the minimum on the CC's and any extra money you have put towards the car. Once the car is paid off, then go to the next debt with the highest interest rate. And so on. I am learning this right now. I use MS Money 2002, it has a debt planner that groups all your debts, you tell it when you want to be DEBTFREE and it tells you exactly how much to pay on each debt every month until its all paid off. It's actually pretty cool! jus my 2 cents
Radiohead, Do you have an emergency fund? I'd use some of the money to establish some savings{if you don't have any already}. That way, when something unexpected arises, you have ready cash to pay for it and not have to use credit cards. After the e fund is in business, I'd pay as much as possible to the highest interest rate debt.
This is extremely excellant advice. Before you go overboard in trying to pay down your debt, try to provide yourself with at least a 3 month protection account, though 6 months would be better. Once you have that, then pay off your most expensive debt first(this is determined by interest rate). Even though I have heard some "radio experts" say to pay smallest to largest, you will save more money in the long run by paying most expensive to least expensive. Good luck to you. fla_tan
Well, I sort of took advice from all and have done the following, $900 towards the car, $400 towards credit cards, $500 in savings. As far as emergency money, I do have a savings account with a decent amount of money in it, as well as some stock investments that are pretty liquid, but I am using these more as a 'put Radiohead through lawschool fund', but in an emergency they can be tapped. Personally, I want to pay off as much debt, makes me feel better, (less stress). And when I finish my bachelors and go into lawschool, I want to be debt free, besides a small student loan balance. Thanks Everyone!
