Deciding Which Debt to Attack First
March 7th 2008 10:46
I have two cards that I refer to as my tuition credit cards. One will be losing the 0% APR in May, and the other in August. I want to start paying more towards one of the cards to make it disappear faster, but I can't decide which one. There are lots of other intangibles involved here as well. For instance, if I can get one low enough so that I could get it below $1000 by May (by raiding the EF) then I would do that instead of paying off my car.
I can't decide if paying off my car, or paying off the credit cards first would be a better decision. And, if I try to pay off the credit cards first, it might take so long that my car gets paid off anyway before I'm done with the cards. (My last payment will be due January 2009).
Here's how everything stands right now:
Card A: $2714
Card B: $2960
Car: ~ $1600 for payoff this minute
After I make my April payment, I expect the payoff to be about $1300. If I take $1000 from my EF (leaving it around $700) plus $300 from my Mom, (she said she'd make up for me not getting an economic stimulus check - plus the car is in her name and I have to send her the money to pay off the car anyway), I'd be able to pay it off at the beginning of May. That wipes out $154 worth of monthly payments.
Or
If I took the $1300 and applied it to one of the cards I could knock a nice chunk off of it. But then I'd still have both a credit card payment and a car payment for as long as it took me to finally pay off the rest of the credit card. With the first senario I'd wipe one payment out in May.
Here's where it drives me crazy. My car payment interest is only 6.5% or something around there. When Card B ends it's 0% APR in May, it'll go up to 8.9%. Card A goes to 10.24% in August. If I pay my car off, I'll have to pay even more money to the credit cards because of the interest. If I try to knock out at least one credit card that payment will be lower, but I'll still have both payments to make, plus my student loans will come due in June, adding more monthly payments.
Ahhhh! My head is spinning. I've been going back and forth on this for the past month, trying to decide which is the best route. And even which credit card I should try to knock out first. (I'm leaning towards Card A). I guess it's going to be one of those "wait and see" things.
Anyone have any ideas?
I can't decide if paying off my car, or paying off the credit cards first would be a better decision. And, if I try to pay off the credit cards first, it might take so long that my car gets paid off anyway before I'm done with the cards. (My last payment will be due January 2009).
Here's how everything stands right now:
Card A: $2714
Card B: $2960
Car: ~ $1600 for payoff this minute
After I make my April payment, I expect the payoff to be about $1300. If I take $1000 from my EF (leaving it around $700) plus $300 from my Mom, (she said she'd make up for me not getting an economic stimulus check - plus the car is in her name and I have to send her the money to pay off the car anyway), I'd be able to pay it off at the beginning of May. That wipes out $154 worth of monthly payments.
Or
If I took the $1300 and applied it to one of the cards I could knock a nice chunk off of it. But then I'd still have both a credit card payment and a car payment for as long as it took me to finally pay off the rest of the credit card. With the first senario I'd wipe one payment out in May.
Here's where it drives me crazy. My car payment interest is only 6.5% or something around there. When Card B ends it's 0% APR in May, it'll go up to 8.9%. Card A goes to 10.24% in August. If I pay my car off, I'll have to pay even more money to the credit cards because of the interest. If I try to knock out at least one credit card that payment will be lower, but I'll still have both payments to make, plus my student loans will come due in June, adding more monthly payments.
Ahhhh! My head is spinning. I've been going back and forth on this for the past month, trying to decide which is the best route. And even which credit card I should try to knock out first. (I'm leaning towards Card A). I guess it's going to be one of those "wait and see" things.
Anyone have any ideas?
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