There are 3 things DH and I want to begin to start paying off as soon as possible (we want to go on another family vacation next year - we had so much fun on our first ever family vacation this year).

#1 - DH's Truck
Balance = $3,500.00 (approx - this month's payment still has not been taken out of our bank - automatic transfer)
APR = very low, I am not sure of the exact amount.
Payment per month = $250.00 (only $17 was interest last month out of this payment)

#2 - Credit Card
Balance = 2,790.00
APR = 8.56%
Payment per month (minimum) $56.00 (but I have been paying $150.00)

#3 - Credit Card
Balance = $4,400.00 (approx - I still have not gotten this months statement)
APR = 8.99%
Payment per month (minimum) $90.00 (but I have been paying $150.00)

I hate paying the minimum payment for credit cards, although I realize that if I only paid the minimum on one of them, I could pay even more on another one, thus reducing debt more quickly.

If I free up the $250 for the truck payment, I will be able to add an extra $250 towards our other credit cards. This is what I am leaning more towards.

Does this make financial sense?

With our tax rebate check coming in about a month, I could have $1,500.00 in our account that I could immediately transfer into the truck loan payment, reducing that amount even more.

What do you think makes best financial sense in this situation?

__________________
"Yesterday my life was duller, now everything's technicolor!"

The first thing I'd pay off is the higher interest credit card. Then I would pay off the other card and finally the truck.

__________________

If you have every read anything about Dave Ramsey (Total Money Makeover), his advice would be to pay off the smallest balance first and then snowball that payment towards the next one. His plan includes overhauling your entire budget to put any extra money towards debt. We are trying to follow it right now

__________________
Shelley
blue5203@aol.com

~Mom to Andy-11/3/05 and Ryan-7/31/08~

I would pay #2 off first (smaller amount almost the same interst rate) then go to #3
Leave the truck for last.

The only thing is really try not to use the credit card after it is paid off.

Credit cards and then truck. But none of it matters if you are still using credit cards. Pay minimum on higher balance card and you can put the difference towards the smaller balance card have it paid off in a little over a year. Any extra put towards the larger one. Save truck for last since you have evidently borrowed cheaper money on the truck.

Paying the credit cards in either order works okay, but it will give you a feeling of satisfaction to be done with one of them in a years time.

My CPA when we were living in MN has this website...

Larsen, Larsen & Associates, P.A.

Lots of great calculators where you can enter variables and such...maybe that will help?

Sara

__________________
saraedawson@yahoo.com

Mommy to Jake, Alexis, Abigail and Joshua, Wife to Matt

Experts advise is to pay off the highest interest debt first... But I did the opposite .

I paid off my Car first even though it was the lowest in interest ...It gave me a extra $350.00 a month I could apply to a credit card. Then I paid off the Credit card with the lowest balance--It moviated me more to keep going and to get out debt faster.

__________________
Angels may not come when you call them, but they'll always be there when you need them.

I would pay off the truck first, since that will free up $250 per month. Then you can go for the highest interest rate c/c.

__________________
Doing the right thing isn't always the same as doing the easy thing.

My sister is currently doing this and my brother did it as well. It's worked/working out very well for the both of them!

__________________

I say start with the one with the smallest balance.

That's what we did years ago when we had multiple student loans, credit cards, cars, etc. We started with the smallest, then as we paid things off we added that payment to the next smallest balance and got it all paid off. Worked great for us. We've been almost debt free since then. All we have is the mortgage, 1 credit card that we pay off monthly and we will only have 1 car payment at a time.

Lisa

__________________
"It's not having what you want,
It's wanting what you've got"

I would pay off your cc #3 and continue making all other payments.

I would look at my outgo and see what I could cut back on to get your cc#2 paid off quicker.

I would stop using any cc and only get what I can pay for as I went through this.

I would then start saving for next year's vacation, no sense in getting cycled back into having debt.

Check your outgo. It's money you already have, just divert it into paying off debt.

dl

I would start by paying the minimum payment on #3, and putting $300/month towards #2. It'll be paid off in ten months.

Then put $300/month towards #3 for the next six months, and that debt will be down to about $2,400. At that point, the vehicle will be paid off in full from just your monthly payments if my math is correct. It may take one more month... but that should do it.

At that point you'll have $550 available to pay towards that $2,400 debt. In five months, it should be wiped out and you'll be debt free in 19 months.

The only "new" sacrifice you'll need to make to do this is to come up with $90 to make the minimum payment on #3 for those ten months you're paying off #2. If you can do that, and then even after the ten months keep using that $90, you can put $390/month towards #3 (and then $640 towards #3 once the truck is paid off) and you can shorten the life of #3 by a couple of months.

We Just paid off 4 CC a few months back, The way we did it was paying off the SMALLEST on the 7 CC's we have, that way we can added more money to the larger ones.

My Van payment is another story. My payment is 245.00 a month But the APR is not that much being this was the 1st time either one of us has ever had a carpayment 7.5%...

we paid off
Amazon.com 450.00
Overstock.com 242.00
Disney Visa ( Yippie paid the last payment this month of a 5,000 Balance !! )
Paypal Visa ( just over 600.00 )

That leaves the Gas card,( with gas prices nearly 3.50 here I don't know if we will ever get this paid in full), Sam's and Target..

LOL as soon as we get these paid off ,I'm buying a RV !! Oh well Dh was already warned this was my game plan for the last 3 years. I hope to have them all paid by years end, I so want to go travling around the USA next year, 1st stop being TN and Tx.

__________________
MyCoupons Is #1 for Holiday Shopping

I did it this way for DH before we got married. I told him I would not marry him till his debt was payed off. he handed over his money and I went to town paying down his bills. He had SO MANY credit cards.

We did the Dave Ramsey thing too. It really helped us focus and we paid off our debt really quick. Go to the library and check the book out. It is really informative and helps you focus and hit your goals.

I would get a 3rd credit card with zero interest for 6 months or a year (if you can find one) and balance transfer the 2 credit cards onto that one. Then pay the max you can on the balance transfered no interest. At the end of the zero interest, I would transfer to another zero interest card til it's paid off. I would pay off the truck last.

If you can't do the zero interest deal, pay off the card with the least amount owed since the interest is similar to the higher amount card. Then you have one bill paid off. Then work on the higher owed car and then the truck.

Don't go on vacation unless you have the $$$ for it. Don't recharge the credit cards and have to start over....

__________________
Proud to say I haven't shopped at a Wal-Mart since Sept 2003

Thanks for all of the advice!!

We don't plan on using the cards at all. A lot of the debt is old debt on the higher owed credit card. And the newer debt is our past vacation.

We want to be able to go on vacation next year without putting the entire debt on a credit card.

I am discussing all of the options discussed with DH. Thanks everyone!!

__________________
"Yesterday my life was duller, now everything's technicolor!"

If paying off the truck would allow you to reduce its insurance coverage, that might be worth considering too.

Pay off the smaller credit card first!
That will be the quickest one to do since it is the smallest.
That will give you more incentive to jump on the others!
Next pay off the other credit card and then the truck.
Good luck!
Anything for a great vacation!!!!!

__________________
Square dancing is friendship set to music!

What is the interest rate on the car loan? If it's more than the credit card interest, pay it off first, if not, save it for last.

First, call each credit card and see if you can get a lower interest rate, although what you have isn't bad. Then, see about combining both of the balances into the account with the lowest interest rate via a balance transfer. If you can't do that, pay off the highest interest rate car first (or if the interest rates are similar, pay off the smallest balance first).

Be sure to find out if there is a penalty for paying off the truck early. Some car loans have a clause like this and it may not be worth it to pay it off early if you'll have to pay a penalty. Also, find out if you pay extra on your car loan, does it go toward the principal or is treated as an 'advance payement? If it is simply an advance payment, there's not a lot of incentive to pay it off early because you'll still be paying the same amount. If it comes off the principal, by paying more, you'll end up owing less.

Sarah......mom to Jason & Devin

Something else to keep in mind is that most credit card companies can raise your APR at anytime.
Even though right now you have a good APR..that could change quickly.

A short article to explain how these banks can rasie your APR even when you pay your bill on time.

frontline: secret history of the credit card: eight things a credit card user should know | PBS

"» Even if you make your credit card payments on time, the credit card bank can raise your interest rate automatically if you're late on payments elsewhere -- such as on another credit card or on a phone, car, or house payment -- or simply because the bank feels you have taken on too much debt.

This practice is called the "universal default" clause and increasingly is becoming a standard clause in credit card agreements. According to credit card executives, the logic behind universal default is that the bank is not being unreasonable in raising rates when it has reason to believe that the risk of being repaid by the customer has increased. [Note: Credit card banks can now easily track your everyday financial activities and monitor your credit score -- see below.]"

This is the John Cummuta "Transforming Debt to Wealth" "secret"

Take the highest interest bill. Double the minimum payment. You'll pay it off quickly. Take the amount of money you used to pay on that and add it to the amount you pay on the next highest bill. And so on and so on.

This works for people I hear. The best way is the way we do it. Don't buy things unless you can pay for them. We have no debt other than one house and one vehicle (we already paid the other one off two years early).


Do NOT cancel your cards it lowers your credit score (I know they are 8@$1@3ds!)

__________________
The political system is broke and it's a joke.

We did the John Ramsey thing...our home was paid off last month, and all our money pays us now. Once you get one of the cc paid off and you start snowballing...I was able to triple my regular mortgage payment without paying any extra out of pocket than I was.
Also, totally stop using your credit cards. if you do use them, immediately write a check to cover what you used. Thats the best advice I can give.
We are planning on buying a new vehicle this year, and with our trade in and cash, we wont have a payment for that either, and we have increased greatly our 401k contributions.