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RE: Q on best debt to pay off - 2/19/2008 10:20:59 AM

Hippiekinkster

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quote:

ORIGINAL: SubbieOnWheels

quote:

ORIGINAL: Hippiekinkster
I'd drop collision when the cost of repairs for a major (but not totalled) crash exceed the value of the car.

Um - isn't the definition of "totaled" when the cost of repairs exceeds the value of the car?

Hell if I know. I've never done it. You're probably right. I likely screwed up.

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RE: Q on best debt to pay off - 2/19/2008 10:32:08 AM

celticlord2112

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quote:

Disagree with you on the collision. Repairs be expensive these days, even for minor shit. I'd drop collision when the cost of repairs for a major (but not totalled) crash exceed the value of the car. I have a 94 Benz drop-top, and there's no way I'd drop the collision on it.

The older the vehicle gets the lower the threshold at which the insurance company will total the vehicle. Beyond a certain point, you're paying for coverage that you will practically never be able to use, and then you're just throwing money away. Keep the money in your pocket and put it towards a down payment on a new vehicle.

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RE: Q on best debt to pay off - 2/19/2008 10:37:29 AM

Hippiekinkster

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quote:

ORIGINAL: celticlord2112

quote:

Disagree with you on the collision. Repairs be expensive these days, even for minor shit. I'd drop collision when the cost of repairs for a major (but not totalled) crash exceed the value of the car. I have a 94 Benz drop-top, and there's no way I'd drop the collision on it.

The older the vehicle gets the lower the threshold at which the insurance company will total the vehicle. Beyond a certain point, you're paying for coverage that you will practically never be able to use, and then you're just throwing money away. Keep the money in your pocket and put it towards a down payment on a new vehicle.

That's normally the case. There are exceptions, of which Sadie (my baby) is one. She's lost as much value as she ever will; she's becoming a collectible.

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RE: Q on best debt to pay off - 2/19/2008 10:38:40 AM

pahunkboy

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quote:

ORIGINAL: BossyShoeBitch

Do you have a 5,000 limit on that 5.9% card or a $5,000 balance? Same question for the 9.9% card...
How much would you be talking about paying down your mortgage? A bit extra per month or one lump sum?

The 5k-5.9 credit limit IS 5k, the rate on added purchases is 10.5%. I asked for a higher limit, but was denied. 3-31, is the deadline for the balance transfer sale.
The visa at 9.9%, has a 15k limit. Both are credit cards from credit unions who offer better value.
The mortgage has no prepay penalty. The PA version of FHA wrote it-so I am not part of the subprime mess. :-)

Due to a grant program that I am in, come July, Ill have 4k that can be used for house, education, starting a business, or home upgrades. they are strict in how the funds can be used. [it is a family savings account program, most states have them..]

Meanhile, a buddy is selling a place cheap. I might want it. I have a family willing to pay what I would like on this place - the income is good but the credit is horrensous, and I dont know if I want to carry a note on it.
If it DID work out- i could have a paid for house and money in the bank. in a pristine tim-buc-too boonies town where no one wants to life....

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RE: Q on best debt to pay off - 2/19/2008 10:41:14 AM

celticlord2112

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quote:

That's normally the case. There are exceptions, of which Sadie (my baby) is one. She's lost as much value as she ever will; she's becoming a collectible.

I'm fairly certain that when you start naming your vehicle, the normal rules of personal financial management no longer apply!

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RE: Q on best debt to pay off - 2/19/2008 10:49:41 AM

Hippiekinkster

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quote:

ORIGINAL: celticlord2112

quote:

That's normally the case. There are exceptions, of which Sadie (my baby) is one. She's lost as much value as she ever will; she's becoming a collectible.

I'm fairly certain that when you start naming your vehicle, the normal rules of personal financial management no longer apply!

I suspect you're right. I treat her like I do my other women... pampered, but taken out for some long, hot drives.

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RE: Q on best debt to pay off - 2/19/2008 10:59:23 AM

BossyShoeBitch

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Best practice indicates paying off any credit card balance in FULL every month so you never pay any interest. If you have any funds left over to pay down the principal on your mortgage anytime, do that when you can too.You would be shocked to find out how much interest expense you save over the life of the loan by making one extra payment per year. Don't cancel any cards you have but don't use.. It turns out to be detrimental to your credit score...

< Message edited by BossyShoeBitch -- 2/19/2008 11:02:45 AM >

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RE: Q on best debt to pay off - 2/19/2008 11:01:11 AM

MiGTeK

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I can't give you any advice on the insurance, cos it seems that you guys do things differently to us here in Australia.

As for the debts, though, anything you can pay off above what you need to is a bonus.

I've got a $10k personal loan, and my minimum repayment is $48.50 a week. I'm currently paying back $60 pw. That extra $12.50 will take off almost three years and a good couple of thousand dollars on the interest i'd pay back if i was paying the minumum.

As a possibility, have you looked at getting a single personal loan, and using that to pay off both credit cards? If the interest on a personal loan is lower than a credit card, which it almost always is, you'll be saving yourself money in the long run by wiping both cards free, and having a single payment per month/week. I'd work it out like this:

Add together how much you pay back on your credit cards each week/month/whatever.
Ask at banks/credit unions/etc about loans to cover both closing balances on your credit cards. Get a repayment figure on the longest term available. Also find out if you can use your mortgage for the same purpose, given thta home loans are about the lowest interest loans you can get. (here, at least. i've seen some stuff on the news about the us's credit situation at the moment, and while i don't really understand it, i guess that it could change things.)

Say, for example, you pay $50 a week on your credit cards, and the loan repayments would be $30 pw. Straight off the bat, that's a $20pw saving. If you half that saving, and put half of it into an emergency fund (like you used to use the credit cards for), and half of it onto the loan repayments, you'll end up with a pretty darn good credit rating, and an emergency fund that's actually your money.

It might not be the best advice, but it's what i did, and it's working pretty well for me, though i did also buy a car with the personal loan.

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RE: Q on best debt to pay off - 2/19/2008 11:03:49 AM

GoddessDustyGold

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Always go for the highest interest first. But keep those cards as they are good for emergencies. Also, try, if you can, to always pay on time as well as more than the minimum. That has a tendency to bump up your credit score faster.
Ask you mortgage company for an amoritization schedule. That gives you an actual print out of the monthly payments showing how much goes toward interest and how much goes toward principle. Get that printout every month and look at your budget. Pay the regular payment and then pay the principle on as many additonal months as you can afford. If you can pay, especially in the beginning when it is lopsided in your favor, 2 or three additonal principle payments, that pays down the mortgage very fast. Cross off the extra payments you have made. It feels good to see that balance going down fast, fast, fast. Just be sure to notate on your payment check that you are paying the additional principle. It should be automatic, but I like to be on the safe side with mortgage lenders.
If you have an opportunity to buy real estate and have a positive cash flow, do it! Talk to the people regarding the reason for excellent income but very bad credit. I have done that, and I have trusted My gut and come out smelling like a rose,. (Then again I have had a couple of bad instincts and have been reselling properties in default!

But I did sell them twice!) Think about a lease purchase plan, wherein you can get a down payment (often more than the typical first/last and security deposit) which is lost if they can't go to the closing table in <insert amount of time here>. It can be anywhere from 1 year to 3 years. Now you aren't technically a landlord, but you still have the cash flow. Bump up the rent to make sure you are covered on yor mortgage and have some left over. People will pay more when they are in a temporary fix, but they have good income to debt ratios. Just do a sales contract as well as a lease that fits together. As intended homeowners, you can lay a lot of the responsibility for typical upkeep on them, and they will be better about it, since they already have a larger investment in the property. If they make it to the closing table, there is no reason you can 't carry back some of the purchase price on a second mortgage. That way you continue to have a cash flow. Don't forget to look at the various homeowner policies that will help to cover the more expensive types of repairs.
Then do it all over again!

Edited to unmix paying principle vs paying interest!

< Message edited by GoddessDustyGold -- 2/19/2008 11:48:43 AM >

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RE: Q on best debt to pay off - 2/19/2008 11:41:01 AM

Muttling

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I agree with much of what has been said here, but I have a few slightly different suggestions.

FIRST - How much emergency funds do you have sitting in the bank?   Keep a minimum of $1000 cash (perferably $2000) to deal with emergencies so you don't have to put them on a charge card.

SECOND - Attack the credit cards first, but go after the one with the smallest balance first.   Spending and getting out of debt is 75% emotional.   Getting that endorphin high after paying off that first card and calling up the company to say "I don't need or want you anymore" will help you to continue you the path.

Then go after the next smallest debt, and on and on and on.

THIRD - Once you have waxed the horribly bad debts (e.g. credit cards, personal loans, etc.) attack your mortgage while building savings accounts for anticipated expenses such as a replacement car, Christmas, vacations, etc. The best way to do go after the mortgage is to make monthly payments that are double the normal payment.   This will reduce the time to pay off the loan by up to 2/3rds.

FORTH - Start living Pay Go.   In short, pay as you go.

On the subject of buying another house, would this involve selling your current place or owning two places?   Owning two places is a recipe for staying in debt with your current situation.   I would also be cautious of selling your home right now as you are likley to do much better money wise to stay in your current place for another 5 to 10 years given the current market situation.

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RE: Q on best debt to pay off - 2/19/2008 12:16:21 PM

Real0ne

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Interesting problem Is this a test? :)

Rule of thumb; highest interest OR most money at the same interest if you can pay against the principal in the case of a mortgage.

That said you want ot pay down the house mortage first but there are rules that you must know. If you got a good mortgage you can pay against the "principal". That is impotant and you have to make sure they apply it to your principal. This is as good as refinancing for a lower rate.

If you do the math 5% while the same rate amounts to a lot more money out of your pocket at 25k than 5% of 5000.

If you cannot pay against your principal then its pretty much a toss up, as far as that goes, then I would pay down the 9% one and nibble at the 5% one.

Paying against the principal reduces the amount they charge interest for as on a new mortgage the greater majority of your payment is charged to the interest.

As for insurance thats a more of a judgement call.

Ah I guess I am a johnny come lately and GDG beat me to the punch :)

< Message edited by Real0ne -- 2/19/2008 12:23:12 PM >

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