Pay off CC or Mortgage first?

**lorraineb** · 03-30-2013, 02:47 PM

I assume that you have a fixed mortgage rate? If it is anywhere near the the credit card interest rates, you should refinance to get a better rate. I would put the money toward the credit cards since their rates can fluctuate and one missed payment can raise them all to max rate. Also, as you stated, you do want to have an emergency fund since the unexpected can happen.

**P90XInsanity** · 03-30-2013, 03:18 PM

Yes, it's a very low fixed rate and much lower then the CC rates (Which are around 10-15% depending on the card).. It's a good point you raise about CC rate fluctuation..for missed payments.. I've actually had them try to raise mine even though I've never missed payments.. This typically happens when the debt you owe them is high.. I opt out..

Thanks,
Danny

**Thrif-t** · 03-30-2013, 04:03 PM

I'd make sure I had at least a 6-8 month emergency fund before paying off either. I know we have the money on hand to pay off our mortgage (no credit card debt, though), and although I've been tempted to pay it off; our emergency fund would be too low. I just can't take that chance with karma and all. So we'll keep plodding away with the loan and have it paid off in 3 years.

**P90XInsanity** · 03-30-2013, 04:17 PM

That's another reason I'm leaning towards paying off all the CC debt..first ..then if we paid off the CC debt It will still leave us with 10-11k.. Our total monthly expenses after paying off the CC debt would be around 1500.00 so 10-11k would be a solid emergency fund. (Also I just rechecked and paying off all the CC debt would leave us with an extra 485.00 per month vs 375 or so if we paid off the house)

Thanks,

Danny

**BMEPhDinCO** · 04-01-2013, 02:08 PM

"That's another reason I'm leaning towards paying off all the CC debt..first ..then if we paid off the CC debt It will still leave us with 10-11k.. Our total monthly expenses after paying off the CC debt would be around 1500.00 so 10-11k would be a solid emergency fund. (Also I just rechecked and paying off all the CC debt would leave us with an extra 485.00 per month vs 375 or so if we paid off the house)"

Sounds like you already know the answer then - as tempting as it is to pay off the house, get rid of the cards first! Then, start piling on for the house, with an extra $485 a month, that's almost $6k more for the year (bringing you down to $17k before including your payments - which you said would save you $375 or $4,500 a year). So overall, 12 months later, you will be down to $13k on the house and be debt free AND have a $10k EF - Do that for 1 more year, plus throw in the extra $3k from the EF (because you won't have the house payments) and you will be debt free of both in 2 years.

**P90XInsanity** · 04-01-2013, 02:12 PM

Thanks for the constinued encouragement! (We also get about 4k back in income taxes per year)

**Tonyall** · 04-02-2013, 11:57 PM

Credit cards first in virtually every situation but ONLY if you control your spending this time! If you do not, they you would be better off with a paid off mortgage.

**P90XInsanity** · 04-03-2013, 12:24 PM

Yeah, we are more emotionally/spiritually *content*.. now.. One of the reasons for the living beyond our means was a spiritual issue.. Plus we have a 3 year old.. all of this has helped change our desires/actions.

Danny

**Slug** · 04-03-2013, 12:30 PM

The answer is the credit cards. Don't forget that if you itemize your deductions and write-off your mortgage interest, then the mortgage rate is even lower.

**Jerry91** · 04-09-2013, 10:28 PM

The credit card debt amount is lower than your mortgage amount. You have also mentioned that the interest rate on your credit card is quite high. In such a situation, you can use the cash on hand to pay off your credit card debts prior to your mortgage. Though it is true that mortgage is a secured debt and collateral is attached to it, you have the time to pay off the loan. As far as unsecured debts are concerned, it�s better to pay them off fast as the interest rates may change on a time to time basis. After paying off the credit card debt, if you have a leftover amount, then you can put it in your emergency fund or invest it in a good scheme which will help you earn more returns in future.

**PSF** · 04-10-2013, 01:31 AM

Definitely go with the credit card first, but you must make sure that you never incur interest on the card again. If this is going to be a problem for you I suggest cutting up the cards once you pay them off.

The emergency account is a good idea and the credit card payments you used to make can now be used to help pay off the mortgage. When the mortgage is paid off make sure that your emergency account has enough money in it to cover all your expenses for a 6 month period in case of loss of employment.

After that I suggest investing for the future.

**jpg7n16** · 04-10-2013, 07:10 AM

I'd do the following (in order)

Pay off CC in full
Then, adjust your withholdings ( http://apps.irs.gov/app/withholdingcalculator/ )
Then, build back up to 3-6 months EF
Then, put money towards retirement savings until you're on track (if you're not already on track)
Then, pay extra to the mortgage.

- a $4k refund is like $333/month that should have been in your paycheck. How would getting an extra $333/month help you?

**scottgriffin** · 04-10-2013, 03:57 PM

Pay Off Your Mortgage

I highly recommend paying off your mortgage first. I just paid my off in July of 2011 and it has been the best ever since I made out that last check.

Pay off CC or Mortgage first?