Here's what I owe: Car: $14K 48 mos @6.25 $350 a month (18 towards principle) Truck: $12K 60 mos. @ 5.74 $245 a month Citibank: $7K @ 9.65 $11.5K CL Hubby's med bills $100 month, $2300 remaining 0% My med bills $50 a month $650 remaining 0% I have 3 other CC's no balance totalt available on those are $8,800 Logically, I should pay Citibank cause it's the highest interest, but then I think MY medical bills cause it's so little, but it's interest free. Then I thought one of the cars, cause when I went to see about a mortgage they said pay off a car loan to lower my D2I ratio, but I just refinanced and my payments are total $180 lower a month. We take home a measly $750 a week, plus a sometimes $100 weekly bonus, we don't pay for gasoline, so that saves us $60 a week. Basically at the end of each week we have $200-300 left over, should I bank this? Or, pay something off, or split it between the 2? I've been trying to come up with a solution, but can't make up my mind, can someone do it for me? lol
I agree or the one with the lowest balance, so that you can roll that payment into the next lowest balance after the 1st one is paid off.
Kellie, Do you have any savings? An e-fund as the Motley Fool calls it. If not, I'd suggest trying to get at least 3 months worth of living expenses in the bank and then concentrate on the highest apr.
no no no. Pay off the highest apr!! There is no point in saving money while paying a high APR. The yield on any savings will be much lower than the interest rate!! I cannot believe this advice!! If you want to "SAVE MONEY" you will pay off the highest APR balance first. If i misunderstood your object to this post forgive me, but it seems theres a lot of advice that will "COST YOU MONEY" being given.
Sam- My main goal is to buy a house within a year maybe 2. I want to have a large chunk of money to put down. This is what I am thinking: I drive a Honda, and I baby it, thats the one I am paying $350, my old payments before refinancing were $480 (I was paying $500). From what I have heard Honda's will last forever (or close to it), so I am hoping to have this car for MANY years after it's paid off. So I was thinking pay off the Honda early. Send $500 a month and have it paid off in about 3 years or less. Then I thought, I only owe $650 on the med bill, let's just pay it off an be done with it (I just did this with my $350 student loan last month). Then there's the APR issue, so in that case Citi should go first. I set little goals for myself, and realistically if I were to pay as much as I can with Citi, it still wouldn't be paid off for another 5-7 months. Paying off MY med bills is a little goal I can reach THIS week if need be. I have a little savings $2K, maybe enough to get me through one month. Maybe I should cut up my Citi card to prevent me from using it? See why I am so confused?
Kellie, This is what I would suggest. You mentioned that you have $200-300 left over each week. Save 1/2 of this - put it into a CD, a savings account, etc. Secondly, I would pay off your smallest medical bill first, once that is paid add that payment onto your husband's (65 + 100 + addit money after savings). Keep sending Citibank the minimum until the two medical bills are paid off. Once the two medical bills are paid off (I worked it out to be between 3-5 months) add what you were paying toward the medical bills toward Citibank's minimum payment. By doing this you will actually pay Citibank less interest in the long run because you will be making an increase in payment compared to paying Citibank first and then still having the medical bills and savings account. Citibank's interest rate of 9.65% is not bad. If possible could you transfer this amount to a 0% BT offer. This would save you even more. I'm a big believer in paying off the smallest debt first, I know many won't agree with me, but I find that it gives me a boost knowing that I have paid off a debt and I can now add that payment toward another debt. With me, it gives me a little more willpower to keep going. During this time keep paying the minimum payment toward the cars. The interest rates are low and most mortgage companies expect a car or two still being financed when you walk in for a mortgage. Once the medical bills and Citibank are paid you can begin adding that payment to your car payments or begin stashing away additional savings (or half and half). By the time you go for a mortgage you should have a nice downpayment. Good luck. Dani
The reason for a savings account is to be certain you can get out of debt. When an emergency like car repairs, etc. happens you can pay for it without resorting to credit. Of course, that asumes you want to get out of credit card debt for good. The best way to do that is make sure you're never in a position where you have to use charge cards. There's not a thing wrong with having a cash reserve. Once you have have cushion, pay down the highest apr first. But, if you have a small bill you can get rid of in a payment or 2, do it and take the money you were paying on that and apply it to the highest apr.
Keepmine- I have an IRA, stocks and bonds as well as a small savings, these are my last resort items, I will go to them if I am close to the bottom of the barrell. Dani- Thank you for doing the math for me!!!! I don't really care if I am completely debt free, but I want to get my balance down to something I can pay off EVERY month, with this balance I can't. Seeing as my bonuses aren't always regular, I will put this money into my savings, when I get them. I am going to pay off my medical bill, and be done with it, my luck I'll pay it off and get sick, and be back to square one,l ol. Hubbys med bills is from a surgery, so I know his med bill won't be that high just from aplain old visit. I also should be getting my "injured spouse" tax return within the next 2 months, this should be enough to pay off whatever is left on his bill. Oh not that this matters a whole lot, but my electric bill is about $70 a month, BUT I have electric heat and I don't know how bad it will be in the winter, so I've been paying $100 a month (30 extra), should I be applying this to another balance somewhere?
Are you satisfied with your scores? In other words, do you think that your scores are good enough to get you your home loan? Or, do you feel a need to increase your scores some? My experience is that paying off car loans has no effect on scores. Paying off credit card debt will increase your scores a lot. So keep that in mind. You made a good choice on the Honda. It will go forever. Same with Toyota.
Thomas- Good question! No I am not satisfied, but honestly I won't be satisfied til I'm in the 800's. I am only at 34% used for credit. One of my main reason is "finance accounts" My main goal is to put 15-20% down on a house. Oh and while I'm at it I have a $450 CA that just popped up a few days ago only on TU. I asked for validation in January and never heard anything, then POOF on there in May. I'm willing to pay it, but this CA also has a $1200 med bill for my daughter that I refuse to pay, they charged me for all kinds of tests that weren't done on her. tis last bill isn't on the CR, knock on wood, and I don't want to "start something"....
KHM Your scores look like in one year they will be fine. My general formula after much consideration is simple. Pay off the credit cards first from smallest debt to largest. Then pay the other loans off from highest interest rate to lowest. Also, in general you never wan to try to pay of auto loans when there is still credit card debt. The reason is that auto loans will get paid off within 5 years no mater what happens. Credit card debt can hang around for ever. In you case, 1 save some cash for a cash reserve fund. Check out http://www.bankrate.com/brm/default.asp for money market rates. 2 Pay off the small med bill. 3 Pay down the City charge card. Transfer the remaining debt to a card with no interest for six months. Check out http://www.cardoffers.com/reviews/c...999&apr2=9999&intro=0&Submit.x=36&Submit.y=11 4 truck loan. 5 large med bill. 6 save for down payment 7 car loan. Good luck.
