What do pay off first?

iVillage Member
Registered: 05-20-2003
What do pay off first?
2
Sat, 12-17-2005 - 7:29pm

Can someone please tell me what I should pay off first? I have over 70K in debt. I make 54K a year. I feel really stressed and overwhelmed. Most of it is in school loans. I am going to be coming across 10K and I am not sure what to pay off. Also when I do my income tax, I usually get around 6K- 7K back and I also want to know what to pay off. I have 32K in stock that I can sell and I am tempted to sell to rid of some of my debt. Can someone please tell me? Below is my debt and the APR on them as of today. I have 3 months of school left and I can not consolidate until I am done with school. I want to pay off my car because that is $350 a month, but I don't want to because the APR is so low.

School Loans
$4,360.00 10.5% (adjustable)
$2,625.00 4.7%
$4,000.00 4.7%
$4,000.00 4.7%
$3,500.00 4.7%
$11,951.37 10.5% (adjustable)
$5,500.00 4.7%
$5,000.00 4.7%
$5,500.00 4.7%
$5,000.00 4.7%
$2,063.00 4.7%

Personal Line of Credit
$2690.12 13.65% Tax

Car
$6180.46 4.9%

Visa
$7204.60 10.9% Tax

Wells Fargo (school)
$1754.86 5.3%

United Credit Card
$1634.87 27.99%

iVillage Member
Registered: 01-06-2005
Sat, 12-17-2005 - 9:23pm

I am no expert, but here is MY suggestion.

Leave the student loans for last.

Then, start with what you owe the highest interest rate on.

Do you have a savings account and/or emergency fund? I don't recommend you deplete all your resources to pay off the debt, just in case something unexpected comes along. And I don't think it is necessary at this time to cash in your stocks, either.

Just work on one thing at a time, and each month re-evaluate your situation.

Good luck!!!!!!!!
~Aravis~

 

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iVillage Member
Registered: 03-27-2003
Sat, 12-17-2005 - 9:52pm

I would go in order of interest rate as well. I'm assuming that you are not paying anything on the student loans now. You should also have a 6 month period before you start paying them off right?

Also, the tax refund seems very high-you might want to look into less withholding so you can use that money to pay off debt during the year. I would consider the stock an emergency fund and would not sell it.

It looks like about 20,000 of your debt it not the school loans that you list in the beginning. If you have 10,000 coming to you and another 6,000 in a tax refund that knocks that down to 3,000 and then I would focus intensely on paying that off before those loans become due.

Also, if you have trouble meeting the payment at first call and talk to the student loan people, we had our payment reduced for 2 years with just a phone call which has allowed us to work on higher interest debts and really helped when I didn't have a part time job.

Taleyna