what should I pay first????

iVillage Member
Registered: 01-14-2006
what should I pay first????
2
Sat, 01-14-2006 - 10:42pm

My husband and I have recently added to our debt, not by my choice but its ours none the less. I can't figure out which one to target and get rid of first. The personal loan was almost paid off and DH-the D isn't always dear- added to this loan and took out another personal loan to repair his car after an accident. I wasn't part of that decision so part of me says the heck with paying those two first. I need an impartial opinion of what order to pay these debts. We make a decent living and paying minimums isn't a problem. We have really been blessed but haven't been good stewards of our money. So here's the list:

Personal loan 1 owe 2400 @ 7.5% payments of 200/month
Personal loan 2 owe 1600 @ ? Payments of 42/ 2 week-automatic deduction from DH pay
VISA owe 6200@ 9% payment min 140 usually pay at least 150
Chase CC owe 5400 @8% payments of 130 month usually pay 150 or 200
Student loan owe 1050 @ 7% payment of 55 month
Orthodontist owe 870 @ 0% payments of 90 month
Hospital bill owe 1400 @0% payment 50 or 100 month
Van owe 5400 @ 5.25 payments of 150/2weeks

Also will be paying off a Sears bill this month so it doesn't really figure into the big picture. The total is actually coming down. If DH would work with me instead of against me it would be by even more. We also have a house payment but these are my main concerns. Thanks, the maid

Avatar for endomagazine
iVillage Member
Registered: 11-09-2004
Sun, 01-15-2006 - 1:36am

Hello,

I've included below the balance divided by the minimum payment, to roughly calculate how long it will take you to pay off each debt. If it's an "every 2 week" payment, I just doubled it to make a monthly minimum. I would suggest paying the debts off in the following order, and snowflaking any extra money (you mentioned you occasionally pay more than the minimu) to your "target" debt.

$2400 / $200 = 12 payments -- Personal Loan 1
$5400 / $300 = 18 payments -- Van
$1600 / $42 = 19 payments -- Personal Loan 2
$1050 / $55 = 19 payments -- Student Loan
$1400 / $50 = 28 payments -- Hospital Bill
$5400 / $130 = 41 payments -- Chase
$6200 / $140 = 44 payments -- Visa
----------------------------------------------
Total Debt Payoff: 44 payments = 3.6 years

You mentioned making extra payments to your Visa and Chase credit cards. Based on how much you pay extra on those cards, you have atleast $100 for snowflaking. Think about it this way...

If you added $100 to your monthly payment to the Personal Loan 1, to make it $300 every month, it would be paid off in 8 payments instead of 12.

Once that is paid off you add $300 to your Van, paying it off in 9 payments, instead of 18. Then you roll that extra $600 into your Personal Loan 2 payments, you'd pay it off in 2 1/2 payments (make it 3) instead of 19. Then you roll $642 into your Student Loan, you'd pay it off in 1 1/2 payments (make it 2) instead of 19. Then you roll the $697 into your Hospital Bill, you'd pay it off in 1 1/2 (make it 2) payments instead of 28. Then you roll $797 into your Chase card, you'd pay it off in 6 payments instead of 41. Then you roll $877 into your Visa payments, you'd pay it off in 6 payments instead of 44.

In summary, if you pay off the first debt, then *add* the minimum for that debt to the minimum of your next debt and send that, and keep adding the minimums from your "paid off debt" to your next target debt, doing that until all debts are paid off, you would be finished paying off debt in 28 payments instead of 44 payments. You would save yourself the difference between 2.3 years paying off debt (28 payments) and 3.6 years. The difference is: Debt is paid off 1 year, 4 months early. You would save whatever interest payments you would normally be charged in that 1 year and 4 months.

If you have more to snowball, you could reduce your total debt payoff time to less than 2 years.

Sincerely,
Lindsey Schocke

My Little Trick: Make $800+ a month:
http://2-b.us/?i=33800/ivillage

Sincerely,
Lindsey Schocke

Geeks on Tap: Mission Accomplished

iVillage Member
Registered: 01-14-2006
Sun, 01-15-2006 - 10:59pm
Thanks, I had a plan before DH added to that Personal loan and got the second one. I've sort of lost focus and needed some fresh perspective. Thanks for your time analyzing my debt. I do add the total up periodically and it is still going down. So I'm not doing to bad. Thanks again, I hope to post more regularly in this new year. Maid