So here's a little rundown of my current debt. Now don't go cringing on me. I do enough of that as it is on my own...lol!
Credit Card:
owe: $4,900.98 with fixed 7.9% rate
payment: the minimum payment is about $96, but I pay $195 per month towards it plus anything I may have charged depending on the reasons charged and when.
HELOC:
owe: $44,580.77 with adjustable 7.25% rate (currently at 6.25% apr on last statement...yay!)
payment: the minimum payment varies but is usually under $300 so that is what I pay each month and the difference goes towards principal.
Truck Loan:
owe: $9,524.39 with fixed 5.99% rate
payment: the payment on this is $232.76 I currently only pay the minimum, but would like to make additional payments as soon as the credit card is paid off.
Mortgage:
owe: $111,553.01 with fixed 5.75% rate (originally $121,159 in Dec 2003)
payment: $707.06 plus taxes and insurance escrows = current payment of $920.01. This will hopefully be lowering in April due to a decrease in escrows.
Total DEBT: $170,559.15 (with mortgage); $59,006.14 (without mortgage).
Right now we are doing our best to pay what we have down plus regain the money we lost from our emergency fund when my husband was out of work for 5 1/2 weeks this past summer. Thank goodness we had it, but now we have to recoup it in case we need it again. That plus gas prices have decreased the amount of extra money we have available.
I see the credit card going down dramatically soon. I had to charge some textbooks (and some I paid cash for) and DH has been told he'll be getting a bonus in February though I don't know how much yet.
We've already decreased our expenses to the most we can go at this time without being totally cheap and deprived. So now it is just a matter of being patient and plugging away at the debt little by little while trying to not bring it up further.
My Current Debt
December 24th, 2007 at 03:40 am
December 24th, 2007 at 07:21 am 1198480872
December 24th, 2007 at 01:40 pm 1198503605
December 24th, 2007 at 02:04 pm 1198505049
disneysteve: Even though the HELOC has the higher rate, paying off the truck loan first would save me more money in the long run. Firstly I owe less so it will make me feel better because it can be taken care of more quickly. I will have the large payment amount to add to the huge balance I owe on the HELOC, which will allow me to pay it off quicker than if I was paying it off next. Also, I'll be able to save in other areas such as auto insurance. Yes, in some cases paying the highest interest rates off first would save more money, but not in this case. Also remember that right now interest rates are going down so even though my interest rate is higher my apr is turning out to be not much higher than my truck loan. Sure that can change and if needed I will adjust my plan.
Thank you again for your suggestion though...I appreciate it!
December 24th, 2007 at 02:36 pm 1198506992
Another thing to consider is the true rate on the HELOC, which I neglected to think about. That interest is tax-deductible (if you itemize) while the truck loan is not. That means the actual cost of carrying the debt is probably higher for the truck.
So I take back my first comment. You are right to pay off the truck first.
December 24th, 2007 at 02:56 pm 1198508215
December 24th, 2007 at 04:08 pm 1198512502
You said that your emergency fund was gone when your husband was out of work for 5 1/2 weeks. The ideal situation is to have funding available for up to 6 months. Of course, not everyone agrees with me on this either, but you CAN use something like the HELOC as a source of emergency funding. You don't have to use the whole thing either. For example, half of it can be savings, and the other half can be reduced HELOC or credit card. Just whatever you feel is best.
But yes, I'm also very glad to see that you are concerned with the highest interest first. That, in my opinion, is usually the best way to approach paying off debt.
December 24th, 2007 at 06:40 pm 1198521626
Some people say they are saving $1000 for their emergency fund before paying off debt. Some say 3-6 months. We are comfortable with $5000 so that is what we are going to save in our savings #2. I just started it the end of July with $5. I now have over $600 in it so I feel we are well on our way!
Thanks for your comment!
December 24th, 2007 at 08:43 pm 1198528980
December 24th, 2007 at 10:29 pm 1198535361