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[Tobin S.]

This message was self-deleted by its author (Tobin S.) on Sun Jul 12, 2015, 06:04 PM. When the original post in a discussion thread is self-deleted, the entire discussion thread is automatically locked so new replies cannot be posted.

[In_The_Wind]

1. If it was up to me: Pay down the credit card bill first.

That way if you need to use the money again you already have it.

[Kali]

2. Hi Tobin

I am no expert by any means, but I just opened DU and saw this on the Latest page. I would think probably the credit card - and it also depends on the card's limit. Aren't the favorable numbers for credit card debt around 30 to 50% of limits?

Either way I would think having more credit available there would be more flexible in terms of future needs/emergencies.

[Tobin S.]

3. You and ITW have similar reasoning

The credit card is near the limit of $18,800. I had basically maxed that one out while in school. The good news is that I haven't added any new debt in about 6 months and I've payed some stuff down.

[In_The_Wind]

4. Another good thing about paying down your credit card balance: Your monthly payments will drop.

There by giving you more cash in hand each month.

[lastlib]

5. My question is: Which one is costing you the most?

How much of the personal loan payment is interest? I can't calculate the total interest without knowing how long you have to pay the personal loan, but from the rough calculations I made, it looks like the credit card is the one that is declining the least with the payment you're making. So, odds are, you'll wind up paying more interest on it over the long haul if you don't pay it down. I'll join the others in saying you would be better off paying it down now. Once you get it down to a level that it's costing you less in monthly interest than the personal loan, start paying more on the personal loan. Guiding principle: pay down the one that is costing you the most in interest and fees.

My grandfather liked to say that paying interest was like buying a dead horse. You don't really get any good out of that money. So the best strategy is to reduce the interest as much as possible. Any extra you can pay on principal saves you $$ in the long run.

[Tobin S.]

6. Thanks, lastlib. That makes sense.

Yes, even though the payment on the personal loan is higher, more of that payment goes to the principle. It was a seven year loan on $25,000 and I have about 3.5 years to pay on it. I suppose the credit card debt could turn into something akin to a mortgage if I don't get on top of it.

[lastlib]

7. yeah, that one can explode on you,

especially if you just happen to miss a payment date for some reason. Credit cards tend to be rather predatory, IMHO, particularly so if you don't keep them up to date.

[johngflynn657]

8. mortgage product

Is there a mortgage product that reduces your payment when you make a large paydown on your principle?

[SheilaT]

9. While you've probably already decided what to do,

I'd suggest you look at which debt will last longer and will end up costing more in interest payments, and put the money on that one first.