Debt pay-off question

[ceejay74]

No doctors, just three debt-ridden people creating a family and trying to fix our past mistakes.

Interesting choices. My husband is definitely up for eliminating the loan from my dad next, and I'm more or less in agreement; it's totally the least logical next step, since there's no interest and no minimum payments, but it's got a strong emotional pull. I've paid back $6K in 5 years, so I think my dad knows I'm good for it, but I'd still like to get the rest back to him.

I do miss the rush of getting rid of a smaller debt--I knocked out 7 debts in the past year and a half, but I feel stalled now that I'm working on such a big one (and with layoff and furlough, that one's not going as fast as the others). However, my logical side tells me to either pay off the credit card (AX 3.99%) or the highest-interest student loan (DL at 6.55%) after the CO loan and my dad's loan.

Anyway, I've probably got a year or more to mull it over, but this forum discussion brought the dilemma back to mind for me. Thanks for your input!

[DebbieL]

I highly recommend the bankrate.com site's Debt Paydown Adviser Calculator. You can input up to 9 debts, all their interest rates, etc. It gives you a very good paydown schedule, showing the effects of additional payments, etc. It is a great tool to play around with. Once on the site, look under calculators, debt management, and I think you have to search additional debt management calculators (it doesn't come up on the first list you'll get). It is the debt paydown advisor.

[ceejay74]

Ooh, thanks Debbie! Sounds interesting, I'll check that out.

[moni727]

Originally Posted by JHVS

Generally, is it always smartest to use "extra" cash to pay off credit card debt. I've recently come into some money, not a ton but enough to pay off most, if not all of my credit card debt.

I have other debts: mortgage, car payment, education loan, and American General loan for dental work. But I seem to worry most about the credit card debt; probably about 20K. If I figure correctly, getting rid of the cc debt will make my other monthly expenses much more manageable.

I realize this is a VERY general question but I'm really just trying to figure out if I should take the money and pay off the cards?

Thanks much.

JHVS.

I agree that you should set aside $1,000 of the money you're coming into to have as an emergency fund (if you don't already have one). With that said, by NOT paying off your (im assuming high interest) CC debt, you are losing money each month.

Since you are coming into this money all at once, it would be very wise for you to get out of high-interest CC debt as soon as possible. All the finance charges that 20k accumulates each month is like extra money in your pocket when you pay it off! NOT paying it (when you have the means to) is making you poorer and lose money.

Hope that helps!! Good luck!