Need you opinion on debt repayment...
Find a Conversation
| Mon, 03-06-2006 - 11:02am |
Here is the situation. We have a credit card with a $6000 balance (minimum $80, 18.5% interest) as well as a loan of $2,100 (6.5% interest) that will be finished in June and a dentist bill of $300 (2% interest).
Our income tax return will be about $1,600 and we are not sure where we should send the money. If we put the whole tax return on the loan, it will be paid off in 1 month and that will free up $650 per month to put on our other debt. But if we put it on our credit card it wont make that much of a difference on our monthly payments and it will be June before we can pay anything more than the minimum, which at this point is already a struggle. (I am currently on maternity leave until July). Maybe just writing this out had helped me make my decision, but I truly value you opinions. You ladies sure know what your talking about.
M

M,
Congrats on your new little one.
I agree if you are struggling to make that min payment, get the cash flow going by paying off that loan asap. I would also strongly encourage you to see if you can do something about the credit card interest rate. Start by trying to call the creditor and see if they will lower the rate. Keep in mind though that you won't be able to use that card for new purchases until the balance is paid off. If they won't play ball, see if one of your other credit cards will offer you a life of the balance rate (even if you have to pay $75 to move the balance, you will be lots of money ahead if they drop that rate substantially). As a final resort, depending on what you know/believe your credit score to be, apply for a new card and get a good rate that way. You don't want to send out dozens of apps because that will lower your credit rating but you can apply for 1 or 2 and see how it goes. Another route would be if you belong to a credit union. Go to them and see if they might offer you a loan at a lower rate.
Good luck!
Peg
Danni
cl-phocid, Debt Support Group
All my best,
Danni