Pondering which way to go....
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| Mon, 01-18-2010 - 6:18pm |
We owe my parents $5,000 plus interest (prime +.5 % so ~ 2.5%).
(Borrowed 2,500 in August & 2,500 in October).
My credit card is $3,490 @ 16.90% but once I pay 6 pmnts in a row on time it goes back down to 11.90%...I've made either 3 or 4 on time already. Right now I've been paying $100/month but then interest is about $45-50.
Then the other credit cards balances are insane so there's payment arrangements for them.
I HAVE to get my credit card paid down..like it or not, I need to use it...Our ONLY summer entertainment is camping and the online system opens Feb 21 & everything's booked within days. (And online/phone with CC is the ONLY way to reserve) So I need to have the room on my card to book those sites.
But beyond that, I don't know what to pay down first. Do I pay my parents first because it's "emotional debt"? Or do I pay my credit card because it's a much higher interest rate?
Thoughts?

Parents will usually accept a smaller payment as long as they know you are trying. (I know we would even be happy with $20 a month if our kids owed us $$ - it would let us know that they take the debt seriously and not as a gift)
As your CC's are much higher interest I would put as much as possible towards them.
No payments to them yet - the deal was we were to start repaying in Jan/Feb once the child support stuff was mostly dealt with.
I have $300-350 to put towards these two debts monthly so it's just a question of paying my parents $200/250 & continuing to pay the $100 on the CC, or doing the opposite. (And of course whatever I'm putting on the CC for camping, will be paid for immediately out of entertainment budget.)
My DH gets a bonus in March that he wants to pay my parents with, but I'd much rather see it go to the other ~50,000 of his CC that are at a much higher interest rate!
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Thanks Lila for your thoughts.
My Mom's an accountant (likely had an influence on me choosing the same career path!) so she full well knows the interest situation.
That being said, they are semi-retired and pulled money out of their investments for this, so I don't want to short change them either, kwim? I just did an amortization schedule and if I pay them $213.25 a month, we'll be paid off in 2 years...and that seems like so long! We borrowed money off them before and paid them back in 4 months!
I did call them & left a message asking how much they think an ideal amount is for us to pay monthly.
I would love to do things for them. Unfortunately they moved about 10 hours away from us in 2008 so not much I can do. But they do know how much we appreciate their help, we didn't even ask to borrow money in the first place, they offered because they love our kids lol. :)
This is an easy one from the point of view of every family psychologist in the world:
As a mom who has lent bunches of money to my kids, I have to agree that paying anything will probably make your parents happy.