Which Debt To Pay Off First?
Posted on
June 13, 2010
at
9:07 am
"Long time lurker but 1st time poster and I am asking for some advice on what you would do in this situation. I have about 15k to pay off some debts, which one would you pay off first and why?Here's what i owe:Mortgage: 15 year fixed 5.875% rate= $120k remaining (original loan 130k, 13.4 years left)Student Loan: 30 year 4.75% rate=21k remaining (original loan 90k, 27 years left)Car 1: 5 year 3.85% rate=31k remaining (original loan 32k, 58 months remaining)Car 2: 4 year 2.90% rate=9k remaining (original loan 25k, 19 months remaining)I finished school about 3 years ago and have been very aggressive in paying off my student loans. However, should i be aggressively be paying down my mortgage since the rate is the highest? Common sense would tell me yes, but self fullfillment would be for me to pay off my student loans first. What do you think? Thanks for your advice!"
Posted on
June 13, 2010
at
10:48 am
Dear Alice - Here is the deal. What ever makes you feel more powerful and satisfied, tackle that debt first. If you feel that strong about your student loan, pay off that one first. Good Luck!
Posted on
June 13, 2010
at
10:52 am
if I were you, I would sell both the cars and will not pay 40k plus interest on it. I will buy two (assuming you need two cars: one for you and one for your spouse) used and reliable cars. After that, once I have enough emergency savings for 6-8 months (including your 15k) I will pay as much money as I can towards my mortgage because I am paying higher interest on it.Check out http://www.debit-free.us/2010/05/26/debt-relief-tips-how-one-can-apply-for-a-personal-loan/ and we may be able to help you with a lower interest rate and a quicker way to get out of debt.
Posted on
June 14, 2010
at
5:39 am
I have two credit cards and a loan out although that debt combined doesn't reach 10,000 not even half that. However, I have been having trouble paying it off none the less so I'm taking my highest interest card and paying off the most on it. I went online and found a tool that i plugged information in and it showed me what to pay on it each month to have it paid off by the time I want. These tools are free, easy and everywhere. Just google them.-- Debt
Posted on
June 15, 2010
at
10:49 am
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Posted on
June 16, 2010
at
10:10 am
Hi Alice, just to make sure I have that right, here is a summary of your debt: You're right that generally you should pay off the highest APR first, but the mortgage has the advantage that interest is tax-deductible, and you have a fixed rate. If your car loan APRs are going to increase, you should pay those first. It's important to keep your payments predictable. For that reason you should also have 3-6 months of living expenses in a savings account just in case you have any emergencies. Otherwise, if paying off your cars first keeps you motivated, you should do that. (This is called the 'snowball' method).If you can get rid of a car (or buy a cheaper one), that would also help you pay off your house faster! Keep in mind that if you have 58 months left on your car loan, you'll probably need a new car by the time you pay it off!
Posted on
June 22, 2010
at
3:09 am
Did you try going for debt consolidation, its a loan which is used to pay off other loans, my suggestion is that instead managing this much loans you should take one loan to pay all this.
Posted on
June 22, 2010
at
1:16 pm
This is a very common question. What do I pay off first? The answer is actually very simple.Which debt would NATURALLY get paid off first anyway, if you did nothing but make your payments? Whatever the answer is, that's the one that you would want to HURRY along and eliminate.Lets see, in your case.. the 9k might be a less than 5 year loan, so that's a great candidate, then the 31k car because the time frame is 60 months or less, then the Student loan (because you have 10 years or so), and then the house (with 15 years left)I don't know what your payments are on each of these, but that doesn't really matter. What matters is that you FOCUS your energy into eliminating ONLY the FIRST target. Pay the minimum payment on all the others.Depending on your available disposable income and if you were able to reduce expenses, you could be looking to have the 9k loan and the car paid off in less than 18 months.Good Luck!
Posted on
July 13, 2010
at
6:32 am
i dont think you should try out for any debt consolidation...if i were there i would put more efforts to clear my student loan first and them come out the car...car would be second because of it high apr...also i will try to lower down my expenses to save money for some immediate requirements...
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