Money Matters
JuneMrs
member
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Which Debt Would You Tackle First And Why? (Format is 1st rate, 2nd pmt amt 3rd balance)
| 2.69% | 356.63 | (11,277) |
| 6.30% | 58.18 | (2,761) |
| 2.10% | 20.80 | (1,124) |
| 2.10% | 26.67 | (1,442) |
| 2.10% | 36.39 | (1,966) |
| 0.00% | 61.32 | (1,139) |
Re: Which Debt Would You Tackle First And Why? (Format is 1st rate, 2nd pmt amt 3rd balance)
If you want to post your budget on here the ladies on here are very helpful with that aspect of it as well- helping find budget 'black holes' and giving second opinions on what is reasonable while you are trying to get out of a bunch of debt like this.
Having been following financial experts for over 20 years, it doesn't really matter if you go from smallest to largest in value or highest interest to lowest interest because in most cases, the end result is that you pay roughly the same interest rate and pay off the debt in roughly the same time.
Paying the high interest rate one sounds good, but it depends on how long it'll take you to pay it off. Try calculating you interest to see which saves you more money in the long run.
Personally, I'd probably do 2,3,4,5,1,6.
When is the 0% loan due? I would take that balance and divide it out by the # of months remaining on that loan. How many months do you have left on the car loan?
Basically, I would make sure the furniture is paid off before the 0% goes away. Once it's done, apply the furniture payment to the car. You can write off your SL interest, but not the interest on a car loan. Once the car loan is done, use that payment to help pay down Loans 2 - 5. You can start with the highest interest SL (#2) or if you like wiping out balances, start with the smallest loan (#3).
Keep in mind, too. That a lot of those "no interest payments until 2015" kind of deals will immediately charge you all the interest from DAY ONE if the entire loan is not paid off during the "no interest" time period. It may not be the case for you, but that is how the majority of those retail no-interest types of loans work.
I ditto PPs on the 0%...watch this one carefully! We have done this a few times and I did noticed that the final payment due date at which the 0% ended was a different date on the current statement versus the initial loan statement.
For example, when we bought a refrigerator in 2008 from Best Buy, we did a 0% for 18 months. The final payment was due the 15th according to the initial documents but as the date approached, I followed up on it to be extra certain we would be paying it off in time and I discovered that the due date had adjusted to 3 days sooner!
It wasn't an issue as I had planned to pay off the debt weeks in advance, but if I had not been careful, that would have stunk.
As a caveat: For many MMers, the idea behind using a 0% short-term loan on household items like appliances and furniture is so you can not have the outlay of cash at the time of purchase, but that you can spread out the cost of the item over time. Even though we had the 0% for 18 months, we chose to pay a little bit toward it each month so we weren't just putting off the full amount to 18 months down the road. I took the amount of the fridge and divided the purchase by 18 and put that much toward the payment each month. At 0%, I had this flexibility of not owing interest.
One of the things my dad taught me about finances is to hang on to your own money as long as possible. 0% offers allow you to do this as long as you are on top of them, pay in full on time, and don't screw them up.