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Q on best debt to pay off - 2/19/2008 7:51:12 AM

pahunkboy

Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
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Right then. Am I better off paying down:

1. 25k fixed mortgage at 5.5% 1st year of 30
2. 5k visa card, 5.9% for life of that balance
3.1k 9.9% visa... this is where i charge living expense

Now to consider- amortization, and of my available credit- credit can be reduced at the whim of the cc. [ credit available saves me in emergency situations as I can only go to me for money]
No doubt cash is king.

On auto insurance do I want to reduce to state minimun on a 1998 chevy.
On homeowners do I want to save $36 by upping the $100 deductable? [the wind broke a window- but why claim it? the rate will go up, and mortgage mandates ins]

back to auto, in a state that REQUIRES ins- do i want under inssured at $19 a yr, uninsured at $10 a yr, comprehansive at $37 a year, 250 deductable.

help

Post #: 1

RE: Q on best debt to pay off - 2/19/2008 8:01:32 AM

SubbieOnWheels

Posts: 590
Joined: 12/14/2007
Status: offline

It is always wise to have underinsured and uninsured coverage. If you get creamed by an uninsured motorist, it's pretty good odds that the driver is not going to have enough personal assets to cover your medical expenses. on a 10-year-old car, check the Kelley Blue Book value. If the car gets totaled, you aren't going to get any more from the insurance company than Blue Book (or their own criteria) value, so a high collision portion of insurance is not a guarantee that repairs will be covered. Liability, of course, is a must - and required in many states.

As to the first part of your question - if I knew the answer to that, I'd have a better credit score.

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RE: Q on best debt to pay off - 2/19/2008 8:05:20 AM

LaTigresse

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Joined: 1/15/2006
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Here is my personal take on the situation. Get rid of the credit card debt ASAP.

On your homeowners up the deductable now....... do you get the insurance to cover a broken window or the house if it burns down?

On auto insurance, unless the car has a loan against it or has any value, low milage etc, get the bare bones policy that covers your ass. I also advise a high deductable.

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Just because you are well educated, articulate, and can use big, fancy words, properly........does not mean you are right!

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Post #: 3

RE: Q on best debt to pay off - 2/19/2008 8:11:37 AM

pahunkboy

Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
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the car is paid for and has accident damage. i also have a s-10 1991 pick up truck tho not on the road. if you factor 10 years- say the diff is just $36 a year- 10 years is $360, 30 is $1080 not counting inflation.

especially infation. a $4 lunch is now $8. a $20 phone bill is $40. a $1.50 gallon of gas is $3.; so a $250 deductable means somehting diffenerent then say 10-15 years ago.

(in reply to LaTigresse)

Post #: 4

RE: Q on best debt to pay off - 2/19/2008 8:22:50 AM

BossyShoeBitch

Posts: 3931
Joined: 1/13/2007
From: South Florida
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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?

< Message edited by BossyShoeBitch -- 2/19/2008 8:30:21 AM >

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RE: Q on best debt to pay off - 2/19/2008 8:31:26 AM

badprofessor

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Joined: 12/11/2007
From: Toronto, Canada
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In terms of debt in general, but especially the credit card debt, pay the minimum on everything. If you have extra cash, put it toward the most expensive debt--i.e. the one with the highest interest. You would be amazed at how much you save this way. Quicken has a debt reduction calculator, and this technique ends up giving you the biggest bang for the buck.

You might even consider downloading an evaluation copy of Quicken and going through the process...

(in reply to BossyShoeBitch)

Post #: 6

RE: Q on best debt to pay off - 2/19/2008 8:39:22 AM

LaTigresse

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Joined: 1/15/2006
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quote:

ORIGINAL: badprofessor

In terms of debt in general, but especially the credit card debt, pay the minimum on everything. If you have extra cash, put it toward the most expensive debt--i.e. the one with the highest interest. You would be amazed at how much you save this way. Quicken has a debt reduction calculator, and this technique ends up giving you the biggest bang for the buck.

You might even consider downloading an evaluation copy of Quicken and going through the process...

Pay the MINIMUM on credit cards?!?!?! Oh hell no! Pay those little pieces of plastic from hell off ASAP!

While you are at it, cut them up too.

< Message edited by LaTigresse -- 2/19/2008 8:45:57 AM >

_____________________________

My twisted, self deprecating, sense of humour, finds alot to laugh about, in your lack of one!

Just because you are well educated, articulate, and can use big, fancy words, properly........does not mean you are right!

(in reply to badprofessor)

Post #: 7

RE: Q on best debt to pay off - 2/19/2008 8:46:18 AM

lauren0221

Posts: 681
Joined: 8/29/2006
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I'm with LaT there. The credit companies can raise your interest rates for absolutely no reason (I can't find the article now, but didn't Bank of America recently increase some customer's interest rates for really no reason?), and as long as you owe them money, they have power over you. Pay those puppies off as fast as you can, and keep em for emergencies.

(in reply to LaTigresse)

Post #: 8

RE: Q on best debt to pay off - 2/19/2008 9:09:19 AM

BossyShoeBitch

Posts: 3931
Joined: 1/13/2007
From: South Florida
Status: offline

quote:

ORIGINAL: LaTigresse

quote:

ORIGINAL: badprofessor

In terms of debt in general, but especially the credit card debt, pay the minimum on everything. If you have extra cash, put it toward the most expensive debt--i.e. the one with the highest interest. You would be amazed at how much you save this way. Quicken has a debt reduction calculator, and this technique ends up giving you the biggest bang for the buck.

You might even consider downloading an evaluation copy of Quicken and going through the process...

Pay the MINIMUM on credit cards?!?!?! Oh hell no! Pay those little pieces of plastic from hell off ASAP!

While you are at it, cut them up too.

i think what badprofessor is saying is rather than NOT paying something, pay at least the minimum on everything and then allocate any monies left over towards debt reduction..

_____________________________

A clever man can get out of situations a wise man never gets into...
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.

(in reply to LaTigresse)

Post #: 9

RE: Q on best debt to pay off - 2/19/2008 9:23:03 AM

DesertRat

Posts: 2774
Joined: 11/29/2004
From: NM/USA
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My advice, which is worth every cent you've paid me for it:

Pay down that 9.9% card, but keep it. If that's a fixed rate, it's not all that terrible and if you're a long-term customer, you can later ask (firmly) that they give you a better rate from time to time. I say keep it because if you're anywhere near the edge and tightly living from check to check as I was, the card can be a lifesaver. Over the years mine have served as my "health insurance" and have also saved me from messing up my credit rating, which came in handy later.

No rush on that 5.9% balance, but I bet the other charges on that card would be at a much higher rate, right? If so, when that balance is done, close the card. Do it on the phone and don't be surprised if they offer you a much better deal to keep your business, unless you're a financial train wreck.

When you get the cards squared away, send a little extra on each mortgage payment with a statement (on the check or separately) saying to apply the extra money to the principal. If you can do that regularly, you could find yourself paying off your mortgage in 20 years instead of 30, so it's a little thing that makes a big difference. Don't rush on the mortgage, though. If interests shoot up like they did in the 70s, you could find yourself in the position of using somebody else's money very cheaply.

You might want to take a middle approach to the car insurance. Do you have med insurance? You might want to keep uninsured/underinsured coverage and eliminate your comprehensive coverage. Or see if you can get a really high deductible, like $1,000, and how much that will reduce your premium.

I would go for a higher deductible on the house/property insurance, too.

Good luck, no matter what.

Bob

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(in reply to pahunkboy)

Post #: 10

RE: Q on best debt to pay off - 2/19/2008 9:29:45 AM

sub4hire

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Joined: 1/1/2004
Status: offline

If it were me, I'd pay off the credit card. Then I'd refinance to a 15 year fixed rate loan. Pay one extra payment a year and it will take a couple of years off your grand total.
As for the auto insurance, I'd drop to the bare minimum. Check blue book and consider if your car was totalled. What would it pay? Is it worth it in the long run?

I'm currently looking at a 4.75 fixed on a 15 year loan. Of course it will cost us points..so I'm still looking.

(in reply to pahunkboy)

Post #: 11

RE: Q on best debt to pay off - 2/19/2008 9:31:07 AM

LaTigresse

Posts: 26123
Joined: 1/15/2006
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Ah, well yes, that makes sense.

_____________________________

My twisted, self deprecating, sense of humour, finds alot to laugh about, in your lack of one!

Just because you are well educated, articulate, and can use big, fancy words, properly........does not mean you are right!

(in reply to BossyShoeBitch)

Post #: 12

RE: Q on best debt to pay off - 2/19/2008 9:36:56 AM

popeye1250

Posts: 18104
Joined: 1/27/2006
From: New Hampshire
Status: offline

As a general rule you pay off the bill with the highest interest rate first and that's usually credit cards.
As for uninsured clause on your auto policy yes, you should definately have that these days!
As for your mortgage it doesn't look like it's very much, I'd pay off the other things first then work on your mortgage.

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Post #: 13

RE: Q on best debt to pay off - 2/19/2008 9:47:57 AM

Hippiekinkster

Posts: 5512
Joined: 11/20/2007
From: Liechtenstein
Status: offline

quote:

ORIGINAL: sub4hire

If it were me, I'd pay off the credit card. Then I'd refinance to a 15 year fixed rate loan. Pay one extra payment a year and it will take a couple of years off your grand total.
As for the auto insurance, I'd drop to the bare minimum. Check blue book and consider if your car was totalled. What would it pay? Is it worth it in the long run?

I'm currently looking at a 4.75 fixed on a 15 year loan. Of course it will cost us points..so I'm still looking.

It's kind of a tough calculation, because even though the additional interest is deductible, it's still money gone forever. If the additional interest and closing costs are less than the interest would be on the cards, probably makes sense.

(in reply to sub4hire)

Post #: 14

RE: Q on best debt to pay off - 2/19/2008 9:50:31 AM

celticlord2112

Posts: 5732
Status: offline

Credit cards: Pay them off and keep them paid off every month (but do take advantage of opportunities to increase your credit limits)

Auto insurance: don't bother with collision on any vehicle more than 3 years old, and when you do have collision, don't have a deductible less that $500.

Homeowner's insurance: bump up the deductible there also--at least $500, and possibly higher.

Once you start saving money by doing these things, pad your monthly mortgage payment by $75-$100 dollars to pay down the principal. Every dime you pay off of principal now is a dime you don't pay interest on later. Also, by paying down principal ahead of schedule, more of your later payments will apply towards paying down principal as well--you'll pay off the mortgage significantly ahead of schedule.

When you don't pay interest, your paycheck goes considerably farther.

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RE: Q on best debt to pay off - 2/19/2008 9:53:29 AM

celticlord2112

Posts: 5732
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quote:

Pay the MINIMUM on credit cards?!?!?! Oh hell no! Pay those little pieces of plastic from hell off ASAP!

While you are at it, cut them up too.

Actually, if he has the financial discipline, a far better strategy is to use the credit cards as a cash proxy and pay them off in full every month. It adds to his creditworthiness, which is never a bad thing to do.

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Post #: 16

RE: Q on best debt to pay off - 2/19/2008 9:58:19 AM

lauren0221

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Joined: 8/29/2006
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quote:

ORIGINAL: celticlord2112

Actually, if he has the financial discipline, a far better strategy is to use the credit cards as a cash proxy and pay them off in full every month. It adds to his creditworthiness, which is never a bad thing to do.

Also, if you have a card with points or cash back, you come out ahead using it, and paying your balance off every month. I've got some free airline tickets and $12.00 cash accrued so far.

(in reply to celticlord2112)

Post #: 17

RE: Q on best debt to pay off - 2/19/2008 10:05:14 AM

Hippiekinkster

Posts: 5512
Joined: 11/20/2007
From: Liechtenstein
Status: offline

quote:

ORIGINAL: celticlord2112

Credit cards: Pay them off and keep them paid off every month (but do take advantage of opportunities to increase your credit limits)

Auto insurance: don't bother with collision on any vehicle more than 3 years old, and when you do have collision, don't have a deductible less that $500.

Homeowner's insurance: bump up the deductible there also--at least $500, and possibly higher.

Once you start saving money by doing these things, pad your monthly mortgage payment by $75-$100 dollars to pay down the principal. Every dime you pay off of principal now is a dime you don't pay interest on later. Also, by paying down principal ahead of schedule, more of your later payments will apply towards paying down principal as well--you'll pay off the mortgage significantly ahead of schedule.

When you don't pay interest, your paycheck goes considerably farther.

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.

Upping the deductible on everything is a good gamble, though. I drive an old Volvo day-to-day and have a 1K deductible. (Benz, too, but I don't drive it much.) I have a 1K deductible on my houses and a 10K deductible on my body.

(in reply to celticlord2112)

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RE: Q on best debt to pay off - 2/19/2008 10:11:23 AM

SubbieOnWheels

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Joined: 12/14/2007
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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?

_____________________________

Bethical
Beat me, strike me, take away my reindeer! I'll never tell! -- Walt Kelly, Pogo Possum
I yam what I yam - Popeye

http://www.myspace.com/bethical_wheels

(in reply to Hippiekinkster)

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RE: Q on best debt to pay off - 2/19/2008 10:14:32 AM

KatyLied

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http://moneycentral.msn.com/content/Insurance/Knowyourrights/P35062.asp

Auto insurance claims adjusters usually determine a car's actual cash value by using their company's proprietary database of prices.
Some companies total vehicles at 51% of its actual worth; some total at 80%. The insurance company will pay you the car's actual cash value, minus any deductible on your coverage.

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