141 votes

What should I do with $4,000 cash and High Interest Debt?

Every $1,000 you use to pay off a 26% interest rate card saves you $260 / year. Every $1,000 you use to pay off a 23% interest rate card saves you $230 / year. Every $1,000 you put in a savings ...
134 votes
Accepted

Should I take out a personal loan to pay off credit card debt?

Should I take out a personal loan to pay off credit card debt? Yes. 8% is much lower than 18%, so you'll save money. Anything I'm missing or should look out for? You might be missing the reason ...
  • 49k
121 votes

Getting $10,000 and have $16,000 balance on two credit cards - How to allocate payments?

If the rate is the same, then clearing one card to zero does have one advantage: getting your grace period back. Generally when you owe money on your credit card, and you make a new purchase that new ...
100 votes
Accepted

Hypothetically, should I pay off the smaller + higher interest rate loan first, or the larger + higher absolute interest cost?

This is an interesting question. Many people would tell you to pay the highest interest rate loan first. There are many others who would tell you to pay off the smallest balance loan first. In your ...
94 votes
Accepted

How can I prepare for my US student debt?

But what should I be expecting? How much trouble am I in? If you graduated with $134,181 in loans at a rate of 9.3% you'd expect a repayment amount of $1,722/month for 10 years. If you make $70,000/...
  • 66k
87 votes
Accepted

Multiple loans, multiple payers - how to snowball fairly

First off, your commitment to paying down debt and apparent strong relationship with your brother is admirable. However, I think you are overcomplicating your situation and potentially endangering ...
79 votes

How can I prepare for my US student debt?

IMHO, you made a very poor choice with school selection. When we make poor choices as adults we have to write checks to solve those problems. Yours is one that will cost you well over 140K, and ...
  • 75k
68 votes
Accepted

Using fiancée's money to pay off my student debt

Congratulations on your engagement, and on your desire to begin your marriage debt free. Your fiancée can give you up to $14,000 per year as a gift without having to pay any gift tax. Above that, ...
65 votes

What should I do with $4,000 cash and High Interest Debt?

If it were me, I would pay off the 23%er. That is as long as you don't borrow anymore. Please consider "your hair on fire" and get that 26%er paid off as soon as possible. From my calculations ...
  • 75k
64 votes
Accepted

Why would anyone want to pay off their debts in a way other than "highest interest" first?

It is true that all else being equal, you will pay a lower amount of total interest by paying down your highest interest rate debts first. However, all else is not always equal. I'm going to try to ...
64 votes

Is paying off your mortage a #1 personal finance priority?

Paying off your house quickly should be a #2-level priority, behind making sure you have some basic savings but definitely ahead of any investing concerns, because your house is not an investment; it'...
61 votes

How can I prepare for my US student debt?

You've been tricked into an inappropriate lifestyle And the student loan companies did it. Their motivation is the positively insane interest rates for loans which cannot be discharged in ...
57 votes

I have $3500 in Rollover IRA. Should I withdraw it early and pay off my credit card debt?

Do not use your IRA to pay off this debt! If the penalties are indeed as high as you state, it's like paying almost 50% interest on your debt! Your $3500 balance is real money. You can consolidate ...
  • 23.8k
55 votes

Do I pay a zero % loan before another to clear both loans faster?

By paying the $11,000 into the 2.54% loan you will save $23.30 in interest every month. By paying the $11,000 into the 3.625% loan you will save $33.20 in interest every month. If your objective is ...
  • 20.8k
54 votes

Why would anyone want to pay off their debts in a way other than "highest interest" first?

Very good Ben, in a more simplistic form: If debt was about math only, we would not have payday lenders, 21% + credit cards, or sub-prime car loans. Yet these things are prevalent. Debt reduction ...
  • 75k
51 votes

Hypothetically, should I pay off the smaller + higher interest rate loan first, or the larger + higher absolute interest cost?

The total balance is irrelevant. Try thinking about the interest in terms of each dollar borrowed. Just using simple interest, each dollar borrowed at 1.69% costs you $0.0169 for the year. Each dollar ...
  • 66k
47 votes

Should I withdraw from my IRA to pay off my credit card debt?

If it was me, I'd cut my lifestyle and be done with the debt. You make a great income and I assume you take home around 6000/month. The IRA is not very much and you will probably need it in ...
  • 75k
46 votes

What method do I use to pay current expenses while paying off credit card debt?

While you have credit card balances that are accruing interest, you should not be charging anything new to the credit cards. There are a few reasons for this. When your credit card has a balance ...
45 votes
Accepted

5 credit accounts, from $1750 to $4000, all above 90% utilization. Better to pay $500 on all 5, or pay one off completely for credit score?

First, before we talk about anything having to do with the credit score, we need the disclaimer that the exact credit score formulas are proprietary secrets that have not been revealed. Therefore, ...
40 votes

Getting $10,000 and have $16,000 balance on two credit cards - How to allocate payments?

I would take a closer look at each provider. I have one credit-card provider who when there is a large portion of credit available, they frequently offer promotions on balance transfers so you fill ...
  • 491
38 votes

HELOC debt is 2x my mortgage, help

The first step is to stop adding to the problem. Get on a written budget, cut expenses to the bone, have a modest emergency fund (1-2 thousand) just to help you get through true emergencies without ...
  • 117k
35 votes
Accepted

To pay off a student loan, should I save up a lump sum payoff payment or pay extra each month?

As a new graduate, aside from the fact that you seem to have the extra $193/mo to pay more towards your loan, we don't know anything else. I wrote a lengthy article on this in response to a friend ...
35 votes

Is paying off your mortage a #1 personal finance priority?

For some people, it should be a top priority. For others, there are higher priorities. What it should be for you depends on a number of things, including your overall financial situation (both your ...
  • 450
34 votes

What should I do with $4,000 cash and High Interest Debt?

The difference in interest is not a huge factor in your decision. It's about $2 per month. Personally I would go ahead and knock one out since it's one less to worry about. Then I would cancel ...
  • 117k
32 votes

Do I pay a zero % loan before another to clear both loans faster?

See many past answers: you will usually save the most money by paying off the highest-intetest-rate loan first. (Remember to allow for tax effects, if any, when comparing real interest rates.) Some ...
  • 32k
32 votes

Should I take out a personal loan to pay off credit card debt?

My reading of: We have been working hard to pay off this debt and have been moving in the right direction. is that you are currently able to cover more the minimum payments on your cards/loans: ...
  • 9,035
31 votes
Accepted

Paying Off Student Loans Early

As you noticed, there are diminishing returns on the interest savings as you get closer to paying off the loan. Certainly, the quicker you pay off the loan, the more interest you save. However, the ...
30 votes

Why would anyone want to pay off their debts in a way other than "highest interest" first?

In some cases, it might be rational to pay low-interest debt first, because the consequences of defaulting on that debt are worse. Consider this simplified example. Suppose you have two debts: a ...
30 votes

Hypothetically, should I pay off the smaller + higher interest rate loan first, or the larger + higher absolute interest cost?

Lets make the numbers a bit easier. Suppose the situation is as follows. Loan 1: $150.000 at an interest rate of 2% per year Loan 2: $50.000 at an interest rate of 4% per year This situation is ...
30 votes
Accepted

Is it a good time or good idea to invest money that I will need to repay in a year time that is not currently accumulating interest?

Is it a good time or good idea to invest money that I will need to repay in a year time that is not currently accumulating interest? No. It's (almost) never a good time to risk money you will need 1 ...
  • 46.4k

Only top scored, non community-wiki answers of a minimum length are eligible