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 ...
Grade 'Eh' Bacon's user avatar
133 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 ...
RonJohn's user avatar
  • 50.7k
120 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 ...
mhoran_psprep's user avatar
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 ...
Ben Miller's user avatar
  • 115k
95 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/...
Hart CO's user avatar
  • 70.3k
85 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 ...
Grade 'Eh' Bacon's user avatar
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 ...
Pete B.'s user avatar
  • 76.3k
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, ...
Ben Miller's user avatar
  • 115k
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'...
Mason Wheeler's user avatar
64 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 ...
Pete B.'s user avatar
  • 76.3k
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 ...
Harper - Reinstate Monica's user avatar
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 ...
Rocky's user avatar
  • 24k
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 ...
Victor's user avatar
  • 21k
53 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 ...
Hart CO's user avatar
  • 70.3k
46 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 ...
Pete B.'s user avatar
  • 76.3k
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 ...
Ben Miller's user avatar
  • 115k
43 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, ...
Ben Miller's user avatar
  • 115k
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 ...
rj_uk's user avatar
  • 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 ...
D Stanley's user avatar
  • 133k
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 ...
Tim's user avatar
  • 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 ...
D Stanley's user avatar
  • 133k
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 ...
keshlam's user avatar
  • 44.9k
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: ...
TripeHound's user avatar
  • 9,173
32 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 ...
Per Alexandersson's user avatar
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 ...
Ben Miller's user avatar
  • 115k
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 ...
TTT's user avatar
  • 47.2k
29 votes

Is there any downside to paying off a mortage shortly before moving?

The biggest risk is if the act of making you debt free also leaves you cash poor. Taking every dollar to retire all your debt, but vulnerable to a surprise bill might not be desirable. If you can ...
mhoran_psprep's user avatar
28 votes

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

With all due respect to The David, the $1000 is best put against 20%+ debt, no sitting in checking as part of some emergency fund. I'd agree with the decision to pay off the lower rate card. Why? ...
JTP - Apologise to Monica's user avatar
26 votes

Strategy to pay off revolving debt while building reserve savings fund?

The bottom line is you are flirting with debt, much like I did during my younger years. Many ill-informed people will tell you to continue to march, build wealth by using other people's money. ...
Pete B.'s user avatar
  • 76.3k
25 votes

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?

I know your question is about your credit score, but practically speaking, you should pay of the debt with the highest interest rate first. Doing do will save you money, which is the same net effect ...
Rocky's user avatar
  • 24k

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