What to do with $400-$500 ?

iVillage Member
Registered: 04-21-2011
What to do with $400-$500 ?
10
Wed, 11-30-2011 - 12:21am

Ok, I didn't win the lottery. I just have those $400-$500 that I managed to "save" to utilize this end of the year...They are NOT my eFund nor my sinking fund...the eFund has more or less $375 (still) and the sinking fund has been "sinking" on and off, and I can manage to accumulate about $50/week that can still be put towards that sinking fund...

So, these are my options:

1) Pay off a debt (DELL) that until now was an interest free account, but will kick on 21.99% starting January and run for another 3 years. I pay $26.59/month for that debt. If I pay it off, I could save those $26.59 or use them to pay off another small debt. And will be saving about $430 in interest... This is my favorite...

2) Use them to reduce the current overdraft in my checking account: I live on overdraft and pay an average of $14/month in interest there...not that happy with this one, because it will mean that "somebody" will feel there is "some" money there to use, and the $400-$500 will soon be history.

3) Pay for two courses I want to register my younger son. He has been having huge problems at school because of his anxiety attacks and his anger management issues, and has no friends. These courses are the only thing he likes (he is academically bright) and both the counsellor and the teacher have encourage us to involve him in activities that may help with his social skills...between the two, they cost $400...I will do this even if I have to charge this to the CC. The difference? If I pay off the DELL account, I won't be able to have that debt again. Paying that, I would be avoiding a 21.99% interest, while charging these courses to the CC mean that I will be paying an interest of 12.45%.

Options such as using the money to reduce the other credit cards are not being considered, as each time I manage to reduce a CC for $200-$500, then there is a "need" or a "want" coming from my DH and I don't know how to say no...

My plan, actually, is being closing one credit card at a time: we managed to close our two RBC cards last May and now we are paying a loan instead. The good side is that loans have usually lower interests, don't charge annual fee and you can't use them again, so they just go down as you pay...if I can do that with a CC that we currently have on $18,400, then we will have less opportunities of bouncing back to the limit.

Any thoughts of which option from above will be the best? Any other ideas?

Thanks!

iVillage Member
Registered: 08-24-2007
Wed, 11-30-2011 - 7:30am
Hi silviatic,
I think the best option is paying off the Dell debt. 21.99% interest is really high and $430 in interetst over 3 years is a LOT of money saved. In fact, the interest you've saved on this debt will basically pay for your sons courses.

The only reason I can think of for tackling the line of credit would be if there was an emotional component. When I had debt, I was always $4,000 in the negative with my overdraft, which constantly tripped me up when I went to balance my chequebook (i.e. if I made a deposit, I can to subtract the money from the balance and if I made a withdrawal, I would add it). Not only did I get muffled with the math occassionally, but I also felt like a real loser with the constant negative balance. After much internal debate, I moved the $4,000 overdraft onto a credit card, which meant I was paying an additional 1% annually in interest -- but it saved me so much headache and negativity that it was worth it. So, unless you are in a situation similar to this, I wouldn't use the extra money toward the line of credit. Especially considering someone might "spend" it again!

It must feel nice to have this little bit of wiggle room to play around with! Good to see that you are carefully weighing the options.

Kate


empty purse

iVillage Member
Registered: 04-10-2003
Wed, 11-30-2011 - 9:11am
I would go with Dell. It seems to be the one you are leaning towards and it will be a nice mental break to have one less bill to worry about. I would (personally) take the money you are saving each month and try and up the emergency fund a little bit more. It's amazing how much better you feel konwing the money is there :)
Also, good job on saving the $400 in the first place! That's quite an accomplishment :) Especially if, as you say, your DH isn't entirely on board. Hopefully you are celebrating these wins with him so that he gets more onside :)

Bex -

iVillage Member
Registered: 01-20-2010
Wed, 11-30-2011 - 9:51am

i would pay for the classes with the cash.

iVillage Member
Registered: 11-14-2008
Wed, 11-30-2011 - 10:46am

I would pay off the Dell account.

That is a lot of money for a child's class. I would explore this more. There are lots of children's group activities that are much, much cheaper than this that would still benefit him.

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Wed, 11-30-2011 - 12:10pm

In terms of priorities of spending, the classes for your son sound like the best thing to spend money on.

iVillage Member
Registered: 04-21-2011
Wed, 11-30-2011 - 12:54pm
Thanks Kate,
I am actually in a very similar situation to the one you describe...that's why paying off the DELL debt might be better, as it would mean to close at least ONE debt and move on to the next one. I fear that if I put the money in the account, it will "disappear" and I'll be really upset (with myself)...thanks!
iVillage Member
Registered: 04-21-2011
Wed, 11-30-2011 - 12:57pm
i think he will be on the same board when he sees I'm paying off all the debts. For now, he is in a semi-denial state. So I "save" this money without telling him, and at the end of 6-8 months, I can have the same amount ($500) to pay off another small debt...
iVillage Member
Registered: 10-01-2008
Wed, 11-30-2011 - 12:59pm

HI,

Norma


"Patience is the best remedy for every trouble"- Plautus


iVillage Member
Registered: 04-21-2011
Wed, 11-30-2011 - 1:14pm

Thanks to all for your great advise...I decided to pay off the DELL debt...my son may take only one of the courses recommended (that's $200) and having one of the debts paid off is a gift for myself and my family.

My thoughts are these: If I managed to save $500 since last September, I can do the same in three-five months for now, and then address another of the small debts. I talked to DH and he agreed on calling one of the remaining CCs and asking them to close it and convert into a loan instead. This way, as the loan would be a closed one, we won't be able to charge more money to that particular CC and we will not need to pay the annual fee either. if the bank agrees and can lower the interest even one or two points, we can pay it off faster than a CC.

I'm really excited to have at least a small amount from our huge debt paid off....it feels really good.

Thanks again to all

Community Leader
Registered: 08-25-2006
Thu, 12-01-2011 - 2:48pm
Sounds like you made a wise decision. Although the poster who said "pay for class in cash" is right that we have to change habits, I think I would have done the same thing as you did.

Crossing one debt off of a list can be more rewarding some times, even if it wasn't the most practical.

I remember your struggles with the hubby and kids from last summer I believe. I would agree that he should take at least one of the classes.

Is it the kind of thing you can maybe apply for a scholarship?
Serenity