What is the best way to allocate my bonus to my debt?

[ascorbic]

I am getting a $5k holiday bonus at the end of this month. After taxes that should be around $3.3k or so. I have got a ton of credit card debt, some are on an auto payback plan an others are not.

Card A $1740 0% auto repaying at $175/month
Card B $2950 0% auto repaying at $101/month
Card C $2750 0% auto repaying at $88/month
Card D $9800 0% auto repaying at $175/month
Card E $3800 0% auto repaying at $135/month
Card F $2300 0% auto repaying at $65/month
Card G $570 0% making regular payments
Card H $500 0% making regular payments
Card I $1130 29.99% making regular payments
Card J $80 17.99% making regular payments
Card K $2800 3.99% auto repaying at $100/month
Card L $3100 3.99% auto repaying at $100/month
Card M $1200 0% auto repaying at $600/month (two more payments left!)

I also have like 60k in student loans at various amounts.

So yeah there is a lot of damage and $3.3k is barely going to make a dent but ever cent counts. "Card I" is an obvious choice to knock out because of its super high APR (They aren't willing to lower it, I have asked multiple times). That leaves $2170. I am thinking about taking $600 for savings since I have none, so that would leave $1570 to go around. I have no idea what makes most sense. It would feel good to get rid of Card G&H, but since there is no APR on those, would it make more sense to put the money somewhere else?

[LuxLiving]

I,savings,M,J,K - then start snowballing that M & other payments that you've freed up and continue paying off K & L, then make the rest go away in whatever order frees up the most monthly payment to add to your snowball.

Can you roll those 3.99% balances over to some of the 0% aprs?

[ascorbic]

Unfortunately I would never be able to get a 0% APR card. The only reason some the accounts are at 0% now is because they are closed and in repayment.

So it looks like you are basically saying go after the cards in order of APR.

For K&L which are both at 3.99% does it make more sense to allocate much more to one than the other or should I evenly disperse to bring them both down?

[EconoMutt]

I would pay off Card I and put the rest in the bank.
Do you have 3 to 6 months savings for your emergency fund?
How secure is your job?

[buildmybudget]

Pay off card I and then order them from smallest to largest and pay off in that order. Personally I like Dave Ramsey's approach because you benefit from the psychological victory you experience every time you pay off a card. I think you need that kind of victory in order to remain motivated to pay off your debt. Good luck, it's quite a mountain to climb.

[LuxLiving]

For those in repayment I'm assuming you have minimum payments to each that you're making? Continue making minimums everywhere one is required.

After doing as I suggested above you might want to pick one or the other K or L and apply your new snowball to it. I'd probably go with K myself for the quicker psychological boost of getting another one of them paid off. UNLESS, someone is going to sue you if you don't do X.

When working our way out of debt I did not take every penny and apply it to debt - in each case of cash inflow it seems I split it 4 ways:

10% tithe (RETURNING)
20% debt (PAST)
60% utility bills & living expenses & a small amount of Fun(PRESENT)
10% Emergency Fund (FUTURE).

We are now out of debt and have acted as our own 'banker' for the last several years because we had the Emergency Fund building at the same time as we were paying down debt and we did not have a lot of backlash and resentment amongst the home troopers as we had fun all along the way to debt freedom. YMMV, but it worked for us. You might want to make some slight differences in a percentage payoff plan of your own making.

[connor_zen]

Pay off the largest APR card first, then the others in APR order. But yes, don't forget to celebrate your victories!

[disneysteve]

I think we're forgetting an important detail. You need to be mindful of when each of the 0% deals expires and the default interest rate kicks in. For example, if the rate on F resets in a couple of months and will go to 19.99%, it would be better to pay that off now than to pay off K and L that are fixed at 3.99%.

[ascorbic]

Thanks for the advice everyone.

Every account that is at 0% is a repayment program where the account is closed so there are no worries of the interest rate going back up (unless I don't make payments, then I probably get sued or something).

I'm very disappointed that the government literally took half of my bonus. I only have $2500 extra now

Card I is already scheduled to be paid on the first of December. $600 is also scheduled to go into savings. So that leaves $770. I really like the feeling of removing cards from this list so I think I want to get rid of G & J. The remaing $120 I will apply to H because that will feel good to get rid of.

Next year I will be able to cash in all of my vacation days from this year. Since I didn't take any vacation this year I will have a double pay check. That should allow me to knock out the rest of H. I'll take some more of that for savings to then basically start snowballing in order of APR.

Thanks!

[LuxLiving]

Perhaps it's time to rethink those w-2 exemptions so Uncle Sammie doesn't get too grab happy???

[ascorbic]

Perhaps it's time to rethink those w-2 exemptions so Uncle Sammie doesn't get too grab happy???

I have one exemption. I am single with no children, should I really look into changing this?

[disneysteve]

I have one exemption. I am single with no children, should I really look into changing this?

Probably if 50% of a bonus is going to taxes. Do you get a refund each year? If so and it is more than a couple hundred dollars, something is wrong and you should change it.

[LuxLiving]

Can you go to your payroll department and tell them you want more in your take-home pay and ask for help with realigning those exemptions? Or perhaps you can go online to the IRS website and figure out how much you're going to owe Uncle Sammie this year? Look at your paystub, if YTD you've already paid way more than you're going to owe him? You're making him a free loan. Possibly you could receive more in the next few paychecks and pay down some of those debts? Wouldn't that feel mo'betta than paying taxes you don't really owe?

They have calculators to help you figure it out closer so that you might still get a refund but smaller than you've been getting, and yet get more take-home in each paycheck and in each BONUS.

IRS Withholding Calculator:
IRS Withholding Calculator

1040 Tax Calculator:
1040 Tax Calculator - Financial Calculators from Dinkytown.net

H&R Block Calculators & Widgets:
Tax Calculator - Tax Tools and Calculators - H&R Block

[TermMonster]

You're on the right track and these posts are sound.
The fact that you're already planning to spend your double paycheck on reducing debt shows how far you've come.
Keep up the good work and keep us posted with progress!