What to pay off first?

[b4freedom]

What you should do:

1) Pay off:
a) Chase
b) Car
c) Discover

2) Stop partying so much. Beer is expensive and leads to bad things which is more expensive. Save the drinking until you have kids, you'll need it then.
3) Get another job and
a) pay off debts asap
b) save as much money as you can

[kv968]

Oh yeah, and I don't have an emergency fund I had $650 in a mutual fund that had earned about 8.5% interest over the course of two years, but I used the money to pay down the Discover.. again! But I think I can have more self-control from now on.

See, this is where you have to look at the big picture. You sell and pay taxes on a fund that's earning 8.5% interest (although not guaranteed) and pay off a card that's charging you 3.9%. You would have probably been better keeping the money in the fund and paying the minimum on the card as Steve suggests. Granted, the 8.5% isn't guaranteed and maybe you just don't want that debt over your head, but financially, that would have been the better move.

[KrystalKF]

Well I paid it down when the Discover teaser rate expired and it spiked to 18%. After I paid it down to a couple of hundred dollars I called them to ask what the interest rate was, because I was considering getting a new card and they offered to lower it to 3.9%. So that's where it stands now until June. AND I found out today that my Chase isn't actually going up until August.. So now I guess maybe I should work on the Car and Discover and wait on the Chase. I'm so difficult..

[poundwise]

See, this is where you have to look at the big picture. You sell and pay taxes on a fund that's earning 8.5% interest (although not guaranteed) and pay off a card that's charging you 3.9%. You would have probably been better keeping the money in the fund and paying the minimum on the card as Steve suggests. Granted, the 8.5% isn't guaranteed and maybe you just don't want that debt over your head, but financially, that would have been the better move.

Of course, another way to look at it is that one ought to have paid off all high-interest debt before investing in the first place. It seems to me this fund was more or less a 'dabble' so I think its fine that it was cleared out to pay on a credit card.

I usually hardly care if someone wants to pay high interest to low or large balance to small, but in this case, the Chase card is both the highest interest and the smallest debt, so it must go first.

The interest between the car and the Discover rate is huge while the balance isn't so different. Couple that with the fact that the car payment is much larger than the minimum payment on the card and I don't see any real justification for paying the card first. Pay the car second and then the Discover last.

It really won't make that big of difference overall in your case, because your balances are not so large. We don't know your income or budget but I would think that just about anyone could knock out these debts completely in less than 12 months total; if you'll get serious about it.

Still, there is no reasonable way of figuring this where the Chase card doesn't go first.

[anonymous_saver]

Even though your interest rate doesn't raise until August, I would still pay off the Chase card right now - you have the money and would never have to think about that debt again! Then I would take the $20 you were paying each month on the Chase card to put towards extra payments on the car loan. Do you have extra money each month that you could add to agressively paying off your debt? Even $50 can help. Once you car is paid off, I would continue to pay the minimum on your Discover Card, and start your emergency fund again. Once you have 3 months worth, I would try to focus on paying off that debt, or starting other saving goals as well (down payment for example).

Do you have any school loans?

[myself]

Wow. The credit card companies must love you.

No way would I pay off a 3.9% loan before a 12% loan. That just doesn't make any sense financially. Yes, I understand Dave Ramsey's snowball, but OP said the motivation isn't a factor. From a strictly dollars and cents standpoint, the biggest savings will come from paying highest rate to lowest rate.

In fact, I wouldn't even make any extra payments on the 3.9% loan. Just pay the minimum until it is repaid. Why? Because you can invest your money very conservatively and earn more than that loan is costing you.

What you say is true Steve. However, what if the credit card company decides to up the 19% to say 27% when May hits?
The car note is fixed at 12%, it cannot go up. And May is not that far away.

Based on the latest events, I'd say payoff the Chase as fast as you can, and then work on the Discover (or transfer it to another low rate offer). Then work on the car loan and an EF at the same time (take the money that was for Discover AND Chase, and put that towards an EF).

[disneysteve]

What you say is true Steve. However, what if the credit card company decides to up the 19% to say 27% when May hits?
The car note is fixed at 12%, it cannot go up. And May is not that far away.

I think the Discover rate is good until June. If it spikes up higher than the car loan after that, then I'd change my recommended order. It is always best to pay the highest rate first.