Which to pay off first?

**bjl584** · 10-22-2013, 07:05 AM

We need more info.

How much do you have saved? How long before you buy a house? What price range of homes are you looking at? Do you have a EF?

**TheKayla** · 10-22-2013, 07:06 AM

How much do you have in savings? Also, for how much longer is the CC at 0%?

Your car is the highest interest rate with the fastest decreasing asset in value. Assuming you have a ways left on your CC being at 0%, I'd pay that off first. Then focus on getting out of CC debt, and more importantly -- keeping out. If you have quite a bit saved, put a chunk of it towards your debt since you're only paying interest on them and are tied up by minimums while you have them. However, make sure you have enough savings to cover a very basic emergency fund.

Once you pay off at least those two debts, you can focus more on saving for the wedding and a future home, as well as pay off that student loan, which will likely be a higher interest rate after graduation. Is your SL accumulating interest now? If so, I'd focus on paying that down after the other two debts asap before buying a home!

**dae14** · 10-22-2013, 08:39 AM

Sorry about that I did leave out some info. I currently have about $2500 in savings and am adding about $1000 per month. The CC is at 0% for about 22 more months. We have been looking at houses around 100k and the wedding is right at a year away.

**TheKayla** · 10-22-2013, 09:30 AM

I would cut that amount in at least by half and start paying down your debts. Even though you have plenty of time left on the CC at the 0% rate, how did you get into CC debt in the first place? Was it a few unexpected expenses, or living beyond your means over the long term? If the latter, get the spending under control soon and start paying that down before buying a home. For now though, allocate most of the debt repayment towards the car like I suggested before.

Your savings looks like a good average starting point -- not too low but I wouldn't go lower. I think you should be able to put adding too much towards your savings on hold though until you get your debts mostly paid off. Think about it this way -- once you get rid of those minimum payments and debts, you can put that much more towards savings for a house, wedding, and other savings! All it will do is give you more in the end by paying off debts before saving in this scenario. All youre doing in the meantime though is throwing money away while you're still holding onto the debts.

**BMEPhDinCO** · 10-22-2013, 11:41 AM

I assume the $1k per month is extra in addition to minimum payments...if not, adjust the below as needed

You are $19,500 in debt. You have 22 months to pay that off. I'd put the wedding and house off for two more years. Then, you will be going debt free into them. Use the $4,500 for the wedding. Put off the house or have your new spouse help.

If you don't want to do that... then maybe:
$120 extra on credit card (or save, then plunk down one payment in 20 months, whichever) - $120 a month for 20 months will pay it off before the 22 months comes up

$400 on the car (will be paid off in 22 months)

$300 on the loans (will be paid off in 29 months)

$80 on the wedding

$100 to the house

I would encourage you though, if you get a W2, to put something in a RothIRA type place too (maybe $25 to start?)

**asdf** · 10-22-2013, 07:00 PM

Correct me if my math is wrong, but here's what I'm calculating from what you've posted. You're making $900 every 2 weeks, which I read as $1800/month. You are putting $1000 in savings and $250 toward the car payment. With this information, I'm seeing only $550 left over for other expenses. I'd be curious to see what the breakdown of your monthly expenses are.

Two other questions in addition to that breakdown:
--Does the CC have a monthly minimum that you are paying?
--Are you living with the person to whom you're engaged?

**keen3105** · 10-24-2013, 02:26 PM

Originally posted by dae14 View Post

Hi everyone. I'm new here and am looking for some advice on which debt to pay first. I currently have the following debts:

Car - $8600 @ 4.7%
Student Loan - $8500 (still in graduate school so no minimum payment)
CC - $2400 @ 0%

I am recently engaged and we are looking at getting a home in the near future. My question is which should I focus on paying off first? I currently have some money saved and make about $900 every two weeks. Should I use my savings to pay something off or keep saving for a down payment? The minimum car payment is $197 but I pay $250. Should I focus on the highest interest rates or the lowest amounts to get rid of that debt? Any input is appreciated. Thanks!

You don't have much information, but I have actually been in this situation the first time I did it right the second time I did it wrong, the first time I focused on the highest interests rate, the second time I focused on the highest loan thinking it was more important but the lower payment ended up being more!

**kyoko** · 10-25-2013, 12:17 AM

Hello dae14,

First of all, congratulation on your engagement... Also But I would like to give you a big applause for your discipline and determination, that with $900/every week payments you put more than half towards your savings, adding some extra towards your car payment, and working and going to a grad school!

Like many people mentioned, we still don't have enough information and the fact you have a lot going on near future and with so many variances, it is sort of hard for me to give you my straight opinion.

It is really based on many other factors of your situation, like how much you are planning to spend on your wedding (or are you saving for the wedding??), are you adding more student loans since you are still a student, what is your fiance's financial position, are you staying on your current job or planning to move up your career once you graduate, do you want to become a debt free before you'll get married, and so on. Also it looks like you don't spend much money on your living expenses, and how would it look like once you two get married....?

If you don't mind, please provide us a little more detail information so many of us here may be able to help you out more.

Kyoko

Which to pay off first?