Personal Finance and Investing

Tobin S.

(10,420 posts) Tue Feb 17, 2015, 08:02 PM Feb 2015

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This message was self-deleted by its author (Original Post) Tobin S. Feb 2015 OP

If it was up to me: Pay down the credit card bill first. In_The_Wind Feb 2015 #1

Hi Tobin Kali Feb 2015 #2

You and ITW have similar reasoning Tobin S. Feb 2015 #3

Another good thing about paying down your credit card balance: Your monthly payments will drop. In_The_Wind Feb 2015 #4

My question is: Which one is costing you the most? lastlib Feb 2015 #5

Thanks, lastlib. That makes sense. Tobin S. Feb 2015 #6

yeah, that one can explode on you, lastlib Feb 2015 #7

mortgage product johngflynn657 May 2015 #8

While you've probably already decided what to do, SheilaT May 2015 #9

Spam deleted by MIR Team juansan Jul 2015 #10

Message auto-removed Name removed Jul 2015 #11

In_The_Wind

(72,300 posts)

1. If it was up to me: Pay down the credit card bill first.

Reply to Tobin S. (Original post)

Tue Feb 17, 2015, 08:11 PM

Feb 2015

That way if you need to use the money again you already have it.

Kali

(55,736 posts)

2. Hi Tobin

Reply to Tobin S. (Original post)

Tue Feb 17, 2015, 08:15 PM

Feb 2015

I am no expert by any means, but I just opened DU and saw this on the Latest page. I would think probably the credit card - and it also depends on the card's limit. Aren't the favorable numbers for credit card debt around 30 to 50% of limits?

Either way I would think having more credit available there would be more flexible in terms of future needs/emergencies.

Tobin S.

(10,420 posts)

3. You and ITW have similar reasoning

Reply to Kali (Reply #2)

Tue Feb 17, 2015, 08:25 PM

Feb 2015

The credit card is near the limit of $18,800. I had basically maxed that one out while in school. The good news is that I haven't added any new debt in about 6 months and I've payed some stuff down.

In_The_Wind

(72,300 posts)

4. Another good thing about paying down your credit card balance: Your monthly payments will drop.

Reply to Tobin S. (Reply #3)

Wed Feb 18, 2015, 10:02 AM

Feb 2015

There by giving you more cash in hand each month.

lastlib

(24,902 posts)

5. My question is: Which one is costing you the most?

Reply to Tobin S. (Original post)

Wed Feb 18, 2015, 04:23 PM

Feb 2015

How much of the personal loan payment is interest? I can't calculate the total interest without knowing how long you have to pay the personal loan, but from the rough calculations I made, it looks like the credit card is the one that is declining the least with the payment you're making. So, odds are, you'll wind up paying more interest on it over the long haul if you don't pay it down. I'll join the others in saying you would be better off paying it down now. Once you get it down to a level that it's costing you less in monthly interest than the personal loan, start paying more on the personal loan. Guiding principle: pay down the one that is costing you the most in interest and fees.

My grandfather liked to say that paying interest was like buying a dead horse. You don't really get any good out of that money. So the best strategy is to reduce the interest as much as possible. Any extra you can pay on principal saves you $$ in the long run.

Tobin S.

(10,420 posts)

6. Thanks, lastlib. That makes sense.

Reply to lastlib (Reply #5)

Wed Feb 18, 2015, 06:03 PM

Feb 2015

Yes, even though the payment on the personal loan is higher, more of that payment goes to the principle. It was a seven year loan on $25,000 and I have about 3.5 years to pay on it. I suppose the credit card debt could turn into something akin to a mortgage if I don't get on top of it.

lastlib

(24,902 posts)

7. yeah, that one can explode on you,

Reply to Tobin S. (Reply #6)

Wed Feb 18, 2015, 07:05 PM

Feb 2015

especially if you just happen to miss a payment date for some reason. Credit cards tend to be rather predatory, IMHO, particularly so if you don't keep them up to date.