Tax Return Coming Soon!! What to do?

iVillage Member
Registered: 06-25-2004
Tax Return Coming Soon!! What to do?
7
Sat, 12-12-2009 - 6:44pm

It's almost my favorite time of year! Well, second favorite: of course Christmas is the best.

We're looking at around $4500 back between bonuses, holiday pay, tax returns, etc in January.

Our current debt stands at this:

$374/month car payment- owe $12k
$240/month- owe $6k to DHs grandmother who debt consolidated for us and now we're making great strides in that!
$50/month- lease breakage fee from years ago that I've been paying hardly anything on and still owe $1800

and $6800 left in additional credit card debt that I'm able (starting in January due to holiday expense set backs) to start throwing all my paychecks at.

My question is this: what do I pay off first? The money owed to John's grandmother is our lowest APR and she's fine with the $240 we pay her. Plus, it's not technically shown on our credit.

The $50 lease breakage fee we were threatened with collections a few months ago (although we were never late and never missed a payment, so I'm not sure if they can actually send us to collections after 5 years) also not on my credit

The car payment will be gone in 3 years, but I'm wondering if I should be concentrating on the bills with the highest monthly payment, or highest interest?

I'm familiar with Dave Ramsey who says pay off the smallest balances first to keep motivated, but that's not a problem with us.

What are your thoughts?

Thanks!
Randi

iVillage Member
Registered: 08-02-1998
Sat, 12-12-2009 - 7:42pm
I would go with paying the highest interest off first.




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Registered: 11-14-2008
Sat, 12-12-2009 - 8:11pm

I would pay off the lease breakage fee first. You can pay it in full and forget about it and about them sending you to collections. I am not sure what your credit card balances are but I would pay off the smallest one and then give a lump sum to Grandma to show good faith.

You will have that $50 freed up to tackle the rest of the cards with next.

A car is car is a car. You can tackle it when you are done the rest. you will be that much further along with the payments by the time you get there. You will also have something to show for this one when it is done and probably will be time to start saving for repairs or a new one at the end. That is the sad tale of the car. Never ending. But at least you will have the means to do so because all your other debts will be paid.

Good luck. Having a plan is the key.


iVillage Member
Registered: 03-27-2005
Sat, 12-12-2009 - 11:03pm

We are doing Dave Ramsey's method and I'll tell you that I personally believe in it.

iVillage Member
Registered: 08-08-2005
Sun, 12-13-2009 - 9:34am

Hi Randi! Although I am hardly in a position to give advice, I thought I would drop you a note about how I am planning to use our return. My plan is to use it for the items we can payoff, and that will drop our monthly payments the most. (I am hoping to have a little left over to start our efund too.)Our current position makes it all but impossible to pay everything every month, so ours is more of necessity, but I still think for us it's a good strategy. Good luck to you and your new year plans!

Angel


Wife to Wayne, Mommy to Tyler (15), Nickolas (3) and Noah (1)Follow Me to All Boys!

Angel

Wife to Wayne, Mommy to Tyler (15), Nickolas (3) and Noah (1)

iVillage Member
Registered: 08-04-2008
Sun, 12-13-2009 - 2:13pm

Remember the Obama, Make Work Pay program?




iVillage Member
Registered: 06-25-2004
Sun, 12-13-2009 - 2:50pm

Those are great points! I forgot about the Obama thing... I'm not sure how it'll work with our return. I put the current info in turbo tax and it gave me an estimated return. I would hope they'd have the up to date info on the stimulus plan already built in to the calculator. Time will tell I guess.

The lease breakage fee isn't on my credit report at all. I may try to settle with them and see if they'll accept less. It's worth a phone call!

We have a plan in place with his grandmother and with her, as long as there's a plan and payments aren't missed then we're all fine. She's been a huge help this year! The interest on that bill is $17 a month (for $6700 worth of debt) so paying $240 is pretty generous to get it down. As soon as the higher debt is paid off we're going to put that money on her bill.

Thanks for the thoughts!! Fingers crossed that tax return time won't be bad.

Randi

iVillage Member
Registered: 08-08-2005
Tue, 12-15-2009 - 6:29am
Oh man Marie, I forgot about that stupid withholding reduction! As soon as I read your post, I got online at hrblock.com and did a tax refund estimator. It appears it may be costing us a few thousand in our refund, which really stinks since that was to payoff some bills and help

Angel

Wife to Wayne, Mommy to Tyler (15), Nickolas (3) and Noah (1)