What would you pay off? - Mothering Forums

Forum Jump: 
Reply
 
Thread Tools
#1 of 32 Old 04-03-2008, 12:36 PM - Thread Starter
 
becoming's Avatar
 
Join Date: Apr 2003
Location: Louisiana
Posts: 11,592
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
We have $3800 we can use to pay off some debts, but we're not sure which to pay off. These are our options:

Credit Card #1 - balance $2,024 - minimum payment $102
Credit Card #2 - balance $1,020 - minimum payment $80
Credit Card #3 - balance $445 - minimum payment $15
Credit Card #4 - balance $410 - minimum payment $15
Student Loan - balance $1,134 - minimum payment $169
Motorcycle - balance $741 - minimum payment $93
Medical Bills - we have a total of about $4,000 for which we are paying about $350/month

The best thing for our budget would be to pay off the medical bills. There are about 15 different accounts we're paying on, and a few of them have turned us over to collections. We're having to pay the $350/month to avoid more of them turning us over.

BUT paying off my student loan & another high-minimum debt would also be really helpful for our budget.

Then there are the credit cards, which have such high interest rates (over 20% on all three of them). We don't have enough money to pay off all of them, but paying off the two big ones would be such a relief.

Keep in mind that I just quit my job, so less money each month going out to bills is a very good thing.

What would you pay off?
becoming is offline  
Sponsored Links
Advertisement
 
#2 of 32 Old 04-03-2008, 12:44 PM
 
cravenab00's Avatar
 
Join Date: May 2005
Location: Nebraska
Posts: 1,817
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
if it were me, i'd pay the medical bills, since some are going to collections. they may even settle with you for less since you are paying in full

wife to my awesome DH, homeschooling, unassisted birthing, food growing, life loving mama to 5 crazy monkeys. :
cravenab00 is offline  
#3 of 32 Old 04-03-2008, 12:46 PM
 
Juvysen's Avatar
 
Join Date: Apr 2007
Location: Binghamton, NY
Posts: 7,279
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 1 Post(s)
No question, I'd pay off the credit cards first. It'll save you money in the long run. 20+% interest rates on credit cards will keep you in debt forever if you're not paying them off as fast as possible. Is there an interest rate on the medical bills? If not, I'd pay them off slow and work on paying off as much as possible on credit cards (assuming that's a possibility). Credit card companies give "minimum" payments as a way of tricking you into carrying a balance and ultimately paying more for what you bought.

You might consider trying to consolidating the medical bills... sometimes you can get a lower payment, if that's necessary.

Jenna ~ mommy to Sophia Elise idea.gif  (1/06), Oliver Matthew  blahblah.gif (7/07) and Avery Michael fly-by-nursing1.gif(3/10)

 

dizzy.gif Wading slowly and nervously into this homeschooling thing.

Juvysen is offline  
#4 of 32 Old 04-03-2008, 12:47 PM - Thread Starter
 
becoming's Avatar
 
Join Date: Apr 2003
Location: Louisiana
Posts: 11,592
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
There is no interest on the medical bills and fairly low interest rates on the student loan & motorcycle.
becoming is offline  
#5 of 32 Old 04-03-2008, 12:51 PM
 
Juvysen's Avatar
 
Join Date: Apr 2007
Location: Binghamton, NY
Posts: 7,279
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 1 Post(s)
Personally, I think if there's no interest on it, then it can wait for you to pay off what DOES have interest. My Dh and I focus on paying by order of interest rate. I'm sure other people have reasons for doing it other ways, though.

Jenna ~ mommy to Sophia Elise idea.gif  (1/06), Oliver Matthew  blahblah.gif (7/07) and Avery Michael fly-by-nursing1.gif(3/10)

 

dizzy.gif Wading slowly and nervously into this homeschooling thing.

Juvysen is offline  
#6 of 32 Old 04-03-2008, 12:53 PM
 
asianyoushi's Avatar
 
Join Date: Dec 2007
Posts: 676
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
pay the debt with the interest rates(the really high ones)
asianyoushi is offline  
#7 of 32 Old 04-03-2008, 12:53 PM
mtm
 
mtm's Avatar
 
Join Date: Dec 2003
Posts: 1,467
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Call your cc companies and ask for a lower interest rate, if they balk tell them you're thinking of transferring the account, most of the time you can do much better on your interest rate.

I'd pay the medicals but only the ones about to hit collection, if they're not hitting collection, then the ccs.
mtm is offline  
#8 of 32 Old 04-03-2008, 12:55 PM
 
ArtsyMomma's Avatar
 
Join Date: Jul 2005
Location: Upstate NY
Posts: 1,020
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
[QUOTE=becoming;10921759]We have $3800 we can use to pay off some debts, but we're not sure which to pay off. These are our options:

Credit Card #1 - balance $2,024 - minimum payment $102
Credit Card #2 - balance $1,020 - minimum payment $80
Credit Card #3 - balance $445 - minimum payment $15
Credit Card #4 - balance $410 - minimum payment $15
Student Loan - balance $1,134 - minimum payment $169
Motorcycle - balance $741 - minimum payment $93
Medical Bills - we have a total of about $4,000 for which we are paying about $350/month

[QUOTE]


I would pay off the Student Loan first. If something came up and you couldn't make payments on the student loan, the govt can garnish your wages. Then I would pay off credit cards 3 and 4. That would leave you 1,811. I would then pay off the motorcycle. That would leave you 1070. If you don't have an emergency fund, I would use that $$ for an emergency fund. If you have the emergency fund, then I would pay off cc#2 and put the last $50 towards cc#1.

With this plan, you eliminate 5 monthly payments, totaling 372!

shamrocksmile.gifAmber SAHM Fiber Artist Mom to:knit.gif
Maddison (9): Arwen (8): Finn (4): Aedan (2)

stork-suprise.gif Sept 2012

ArtsyMomma is offline  
#9 of 32 Old 04-03-2008, 12:58 PM
 
Juvysen's Avatar
 
Join Date: Apr 2007
Location: Binghamton, NY
Posts: 7,279
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 1 Post(s)
[QUOTE=ArtsyMomma;10921945][QUOTE=becoming;10921759]We have $3800 we can use to pay off some debts, but we're not sure which to pay off. These are our options:

Credit Card #1 - balance $2,024 - minimum payment $102
Credit Card #2 - balance $1,020 - minimum payment $80
Credit Card #3 - balance $445 - minimum payment $15
Credit Card #4 - balance $410 - minimum payment $15
Student Loan - balance $1,134 - minimum payment $169
Motorcycle - balance $741 - minimum payment $93
Medical Bills - we have a total of about $4,000 for which we are paying about $350/month

Quote:


I would pay off the Student Loan first. If something came up and you couldn't make payments on the student loan, the govt can garnish your wages. Then I would pay off credit cards 3 and 4. That would leave you 1,811. I would then pay off the motorcycle. That would leave you 1070. If you don't have an emergency fund, I would use that $$ for an emergency fund. If you have the emergency fund, then I would pay off cc#2 and put the last $50 towards cc#1.

With this plan, you eliminate 5 monthly payments, totaling 372!
And *then* take the payments from that and pay off the other credit cards and then the medical debt asap.

Jenna ~ mommy to Sophia Elise idea.gif  (1/06), Oliver Matthew  blahblah.gif (7/07) and Avery Michael fly-by-nursing1.gif(3/10)

 

dizzy.gif Wading slowly and nervously into this homeschooling thing.

Juvysen is offline  
#10 of 32 Old 04-03-2008, 01:06 PM
 
mum4boys's Avatar
 
Join Date: Aug 2005
Location: Washington State
Posts: 2,930
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 2 Post(s)
I would snow ball it and also apply for a hardship deferment on the student loans.

Heidi
mum4boys is offline  
#11 of 32 Old 04-03-2008, 01:13 PM
 
Knittin' in the Shade's Avatar
 
Join Date: Feb 2003
Location: near Philly, PA
Posts: 4,541
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
No question, I'd pay off the ones with the highest interest rate first. It makes the most sense financially to stop accruing interest. Then, take the money that you've been paying on those accounts that you pay off and apply it to the next highest rate one until that's paid off, etc.
Knittin' in the Shade is offline  
#12 of 32 Old 04-03-2008, 01:19 PM
 
seap3's Avatar
 
Join Date: Jan 2006
Posts: 792
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
I would pay off anything in collections, or in danger of going to collections first.
The main reason for this is because collection agents are scum, and will harass you until you pay, or they may take you to court for a judgement if they don't like how fast you are paying.

Then I would use the rest (if any), to pay on the highest interest cc's.
seap3 is online now  
#13 of 32 Old 04-03-2008, 01:29 PM
 
phathui5's Avatar
 
Join Date: Jan 2002
Location: Oregon
Posts: 17,019
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 1 Post(s)
Do you already have an emergency fund in the bank?

Midwife (CPM, LDM) and homeschooling mama to:
14yo ds   11yo dd  9yo ds and 7yo ds and 2yo ds  
phathui5 is offline  
#14 of 32 Old 04-03-2008, 01:31 PM - Thread Starter
 
becoming's Avatar
 
Join Date: Apr 2003
Location: Louisiana
Posts: 11,592
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
We do have an emergency fund. Actually we're keeping a little over $2K in our savings account.
becoming is offline  
#15 of 32 Old 04-03-2008, 01:41 PM
 
bc1995's Avatar
 
Join Date: Mar 2004
Location: Northeast Louisiana
Posts: 2,468
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
I think I would pay off the 4 credit cards first, and then snowball that extra $217 towards the motorcycle, and when that is payed snowball it all towards the student loan. Then I would work on the medical bills since they do not have any interest.

Most importantly here, I would look at anything you pay off leaving you the extra payment $ to do something else with. Keep using it to pay off your other debts so you can eliminate them that much faster.

Carrie, mom to Johnathan (7-02), Brodie (2-04), Kate (12-06), Jordan (9-08), (4-09) & Maggie (3-10)
bc1995 is offline  
#16 of 32 Old 04-03-2008, 01:41 PM
 
RoadWorkAhead's Avatar
 
Join Date: Sep 2005
Location: Florida
Posts: 1,995
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
I'm torn. The medical debts in collections would be an issue for me. WHy not look at the individual medical debts and maybe pay some of them that are in collections along with the CCs, and then snowball payments from this point on since you are likely to find a whole lot of extra
RoadWorkAhead is offline  
#17 of 32 Old 04-03-2008, 01:46 PM
 
claras_mom's Avatar
 
Join Date: Apr 2006
Location: California Central Coast
Posts: 2,733
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 2 Post(s)
[QUOTE=ArtsyMomma;10921945][QUOTE=becoming;10921759]We have $3800 we can use to pay off some debts, but we're not sure which to pay off. These are our options:

Credit Card #1 - balance $2,024 - minimum payment $102
Credit Card #2 - balance $1,020 - minimum payment $80
Credit Card #3 - balance $445 - minimum payment $15
Credit Card #4 - balance $410 - minimum payment $15
Student Loan - balance $1,134 - minimum payment $169
Motorcycle - balance $741 - minimum payment $93
Medical Bills - we have a total of about $4,000 for which we are paying about $350/month

Quote:


I would pay off the Student Loan first. If something came up and you couldn't make payments on the student loan, the govt can garnish your wages. Then I would pay off credit cards 3 and 4. That would leave you 1,811. I would then pay off the motorcycle. That would leave you 1070. If you don't have an emergency fund, I would use that $$ for an emergency fund. If you have the emergency fund, then I would pay off cc#2 and put the last $50 towards cc#1.

With this plan, you eliminate 5 monthly payments, totaling 372!
Quote:
Originally Posted by mum4boys View Post
I would snow ball it and also apply for a hardship deferment on the student loans.
I'd pay high interest things first and work out a plan for the others. It's been awhile, but my experience with student loans is that if you contact the lender, they'll work with you--there are all kinds of hardship deferments. As someone pointed out, paying just the minimum on a CC with 20% interest doesn't get you anywhere. The debt will drag around forever.

Mom of two girls.
claras_mom is offline  
#18 of 32 Old 04-03-2008, 01:48 PM
 
ustasmom's Avatar
 
Join Date: Jan 2004
Location: Blue Ridge Mountains
Posts: 2,955
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Pay:
Credit Card #4 - balance $410 - minimum payment $15
Credit Card #3 - balance $445 - minimum payment $15
Student Loan - balance $1,134 - minimum payment $169
Credit Card #2 - balance $1,020 - minimum payment $80
Motorcycle - balance $741 - minimum payment $93

Total $3750
frees up $372 per month
Add that to the medical bills and you will be done with those in less than 6 months. A bit more than 2 months after that and you will be debt free.

Keep up payments on:
Credit Card #1 - balance $2,024 - minimum payment $102
Medical Bills - we have a total of about $4,000 for which we are paying about $350/month
ustasmom is offline  
#19 of 32 Old 04-03-2008, 01:49 PM
 
dsaucone's Avatar
 
Join Date: Mar 2008
Location: wayne county, New York
Posts: 1,011
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
I would pay off the student loan + the first 2 credit cards. With those monthly minimum payments gone ($351) it's equal to the relief you'd feel if you paid of medical bills (monthly payment wise). You now have an extra $350 a month to contribute to your medical bills. That's a total of $700 which will get your med bills paid off in 5 months.

Once the med bills are gone you can get rid of that bike payment in under a month, and knock out the 2 credit cards the month afterwards. In theory. haha.

S-d D which made them three. M grew lonely, and now there's baby D.
"Who of you by worrying can add a single hour to his life?"
dsaucone is offline  
#20 of 32 Old 04-03-2008, 01:55 PM
 
phathui5's Avatar
 
Join Date: Jan 2002
Location: Oregon
Posts: 17,019
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 1 Post(s)
Ok, then I'd do everything but Credit card #1 and the medical bills.

Midwife (CPM, LDM) and homeschooling mama to:
14yo ds   11yo dd  9yo ds and 7yo ds and 2yo ds  
phathui5 is offline  
#21 of 32 Old 04-03-2008, 02:01 PM
 
Kirsten's Avatar
 
Join Date: Mar 2002
Location: Washington state
Posts: 5,362
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
I would pay off credit cards 1, 2, and 3, then put any left towards medical bills that are in threat of going to collections.

Are all the cc general (Visa, MC, AA, etc) or for specific stores? I'd keep one general, and cut up all the rest as soon as the balance is zero.

Have you called the medical and explained that you have a plan for paying them off as soon as possible?
Kirsten is offline  
#22 of 32 Old 04-03-2008, 02:12 PM - Thread Starter
 
becoming's Avatar
 
Join Date: Apr 2003
Location: Louisiana
Posts: 11,592
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
The two lesser-amount credit cards are general Visas. The two higher-amount cards are clothing store cards.

I have spoken with the hospitals/physicians, and they know we're doing what we can. Most of them are being gracious, but the few that have gone to collections are impossible to deal with. They want $50 or more per month, on the same exact day every month, or else we're going to collections. :
becoming is offline  
#23 of 32 Old 04-03-2008, 03:06 PM
 
RoadWorkAhead's Avatar
 
Join Date: Sep 2005
Location: Florida
Posts: 1,995
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
List out all of the debts, with priority to those who aren't being nice. Pay off those medical debts first and foremost. List em out here, and we'll do the math and re-answer which we'd do
RoadWorkAhead is offline  
#24 of 32 Old 04-03-2008, 03:12 PM
 
kerc's Avatar
 
Join Date: May 2002
Location: The Great White North, Minnesota
Posts: 7,230
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Few points:
1. student loans generally have a hardship deferrment. also if you have young kids you can also generally get deferred.

2. You might get a "high" from paying something off -- so in paying off cc#4, you'll probably feel like "whew. one gone!" and then get all jazzed about sticking with it. You could then take that 15 bucks you had been paying and throw it to something else.

You asked what would I do....first thing I'd do is separate out the medical bills. I'd pay anything in collections (or offer to settle those).

Medical Bills - we have a total of about $4,000 for which we are paying about

$350/month
Anything you can make payments on, make payments on and just the payments. (no interest right?)


Next thing I'd do is get rid of unsecured debt:

Credit Card #4 - balance $410 - minimum payment $15
Credit Card #3 - balance $445 - minimum payment $15
Credit Card #2 - balance $1,020 - minimum payment $80
Credit Card #1 - balance $2,024 - minimum payment

$102
Once you pay #4 off, then you can pay $30/month toward #3.


Your student loan payment sounds high. If money is tight (looks like it is) I'd try to get on a longer payment schedule so it isn't so hard to stay current. Once you pay off the other things, then I'd pay off the student loan quicker than your schedule.

Student Loan - balance $1,134 - minimum payment

$169 --

Can you sell the motorcycle, thereby eliminating this payment and coming up with cash to pay off cc4 and 3? Also would eliminate insurance $$ I would think.

Motorcycle - balance $741 - minimum payment $93


Kristin -- mom of Erin (11/5/02) and Leah (9/29/05)
kerc is offline  
#25 of 32 Old 04-03-2008, 03:20 PM
 
Piglet68's Avatar
 
Join Date: Apr 2002
Location: Vancouver Island, Canada
Posts: 10,977
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Well, it's a good "predicament" to be in.

I agree that any medical bills that are in collection or nearing collection I would settle.

I would skip the student loan for now, but I'm saying that based on how SL's work here in Canada. They are low interest, you can ask for hardship deferrments, etc.

I would also get rid of the biggest CC balances (numbers 1 and 2).

Frankly, I would pay off the two small CC's with the extra money you have in your savings account. Then you would be CC debt free! That would free up lots of money to snowball your other debts.

Really, you can't lose - paying off any of your debts is going to be great for you. So when it comes down to it, I'd go with the ones that are costing you the most money over the long term (high interest CCs) and those causing you stress (bills in collection or threatening to be in collection).

teapot2.GIF Homeschooling, Homesteading Mama to DD ('02) and DS ('04)  ribbonjigsaw.gif blogging.jpg homeschool.gif

Piglet68 is offline  
#26 of 32 Old 04-03-2008, 04:11 PM
 
TiredX2's Avatar
 
Join Date: Jan 2002
Location: it appears to be a handbasket
Posts: 20,029
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
The first thing I would do is contact the people/groups you owe on the medical bills. Tell them that you have *some* money to pay right now, could they reduce the amount owed if you could pay it off RIGHT NOW. If they reduce it substantially, you could very well be making a better return than on your credit card bills.

Then I would knock things off in order of interest rates.

And definately snowball until you're debt free

Good luck!

 

 

TiredX2 is offline  
#27 of 32 Old 04-03-2008, 06:01 PM
 
CityChic's Avatar
 
Join Date: Jan 2007
Location: Chicago, IL
Posts: 1,625
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Quote:
Originally Posted by becoming View Post
We have $3800 we can use to pay off some debts, but we're not sure which to pay off.Then there are the credit cards, which have such high interest rates (over 20% on all three of them). We don't have enough money to pay off all of them, but paying off the two big ones would be such a relief.

Keep in mind that I just quit my job, so less money each month going out to bills is a very good thing.

What would you pay off?
I would get rid of as many TOTAL bills as possible. With the $3800 you could eliminate

Credit Card #3 - balance $445 - minimum payment $15
Credit Card #4 - balance $410 - minimum payment $15
Motorcycle - balance $741 - minimum payment $93
Credit Card #2 - balance $1,020 - minimum payment $80
Student Loan - balance $1,134 - minimum payment $169

Total Monthly Savings - $372

You would have less bills, not be gaining interest on small loans and have only two debts left to pay

Credit Card #1 - balance $2,024 - minimum payment $102
Medical Bills - we have a total of about $4,000 for which we are paying about $350/month

Rachael ~ Wife to : DH ~ Son 4-24-07 ~ 6-24-08 ~ Daughter 7-22-09
CityChic is offline  
#28 of 32 Old 04-03-2008, 06:44 PM - Thread Starter
 
becoming's Avatar
 
Join Date: Apr 2003
Location: Louisiana
Posts: 11,592
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
We've decided to pay off all but the medical bills & the largest amount credit card.
becoming is offline  
#29 of 32 Old 04-03-2008, 07:32 PM
 
seap3's Avatar
 
Join Date: Jan 2006
Posts: 792
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Quote:
Originally Posted by becoming View Post
We've decided to pay off all but the medical bills & the largest amount credit card.
Really!!?? I'm surprised.

Aren't you worried about collection agencies or possible judgements?

The credit cards won't come after you for only making the minimum payments, but the collection agencies sure will.

I know everyone needs to make the best decision for their own situation, so if you are happy with it, I'm glad for you.
seap3 is online now  
#30 of 32 Old 04-03-2008, 07:35 PM
 
ustasmom's Avatar
 
Join Date: Jan 2004
Location: Blue Ridge Mountains
Posts: 2,955
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Quote:
Originally Posted by zersha View Post
Really!!?? I'm surprised.

Aren't you worried about collection agencies or possible judgements?

The credit cards won't come after you for only making the minimum payments, but the collection agencies sure will.

I know everyone needs to make the best decision for their own situation, so if you are happy with it, I'm glad for you.
I think that she said that they will put her in collections if she doesn't hit her minimum due on/before a specific date each month. If she clears out most of her other debt, she will have no problem getting them paid.
ustasmom is offline  
Reply

User Tag List

Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page


Forum Jump: 

Posting Rules  
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are Off