What to pay first, cc or HELOC?

Avatar for ddatepj
iVillage Member
Registered: 05-14-2003
What to pay first, cc or HELOC?
4
Wed, 11-05-2008 - 10:41am

Hi, we are 216, 947 in debt. 14619 on a cc at 1.87 APR

iVillage Member
Registered: 03-27-2005
Wed, 11-05-2008 - 7:41pm

Personally I would

iVillage Member
Registered: 11-17-2007
Thu, 11-06-2008 - 12:01am

do1000.00 on

iVillage Member
Registered: 06-17-2003
Thu, 11-06-2008 - 11:13am
Pay the CC first.
iVillage Member
Registered: 01-25-2006
Thu, 11-06-2008 - 12:50pm

I keep thinking about your post and I think I know what I want to say now:

1. $24k in emergency savings would be about 4 months of your expenses. I don't know that I would leave that much in savings at this time. It depends on how stable DH's job appears. I would consider trying to calculate your MINIMUM monthly expenses that you would be able to go down to if he lost his job and consider putting 3-4 months of that amount back for now. At that salary, it is likely to take him a while to find a job so I can definitely support saving more than the typical $1k efund but I'm not sure I'd do the full $24k.

2. I would probably work on the cc exclusively and keep up the interest only payment on the HELOC. You are only going to pay down the principal by a few hundred dollars anyway and that is not going to be enough to get you back up to 20% equity. At the very least, I would pay on the credit card until you paid down the 1/2 on the lower interest rate so that you can start pounding on the portion at the higher rate. Right now everything you pay goes on the lower rate balance so you're sort of losing a bit on the deal. I don't want to say that your fears couldn't possibly come true on the equity issue since I suppose technically they could but I don't think it's very likely. The last thing your lender needs is another very expensive foreclosure on their books. If you were at 140% or something, I'd be concerned but being only at 84%, I wouldn't sweat it.

3. You might want to consider seeing if you can qualify for a better rate for the cc balance on either a different card or a new card so you can get the whole thing down to the same, lower interest rate. Just be sure you look for a card with a different lender (like Citibank won't transfer money among their own products).

Peg