What do I pay off first?

[beks37]

I have been waiting for this day for awhile, about 5 years. The day that I would be getting close to paying off a significant chunk of debt and freeing up $500-$800 a month. Here is what I have:

Debt Consolidation (25K originally) = $3,232,83 paid off 1/3/09
Monthly payments = $509.87

When that is paid off, I will snowball that payment into this:

Bathroom Renovation ($7,500 originally) = $3,615.13 due to be paid off 6/19/09
Monthly payments = $313.38 plus $509.87 starting in 2/09
This would pay off in 4/09.

This leaves me with $823.25 to snowball into something else! Here's what I have left:

Student Loan $63,480.55, 6.75%, pymts = $416.11/month plus I put $320 on principal each month, due to be paid off in 4/27/18

Car Loan #1 $7,256.72, 5.15%, pymts = $268.95, pay off 12/10

Car Loan #2 $10,465.25, 5.95%, pymts = $311.23, pay off 8/11

Which one should I start paying off first? My inclination is to pay off the Car loans because they are smaller and would pay off sooner, but the student loan is a larger percentage but not by much. I know this is not going to happen for a few months, but I want to be prepared and have a plan for when the time comes.

[ladykemma2]

this is what i would do

debt consolidation
bathroom renovation
car loan 1
car loan 2
student loan

[Cricketlegs]

http://www.whatsthecost.com/snowball.aspx


Date Total Debt car (6.00%) Total Debt Interest
Balance Payment (EOM)
August 2008 $7,256.00 $7,256.00 $800.00 $6,456.00 $32.90
September 2008 $6,488.90 $6,488.90 $800.00 $5,688.90 $28.05
October 2008 $5,716.95 $5,716.95 $800.00 $4,916.95 $25.06
November 2008 $4,942.01 $4,942.01 $800.00 $4,142.01 $20.43
December 2008 $4,162.44 $4,162.44 $800.00 $3,362.44 $17.13
January 2009 $3,379.57 $3,379.57 $800.00 $2,579.57 $13.15
February 2009 $2,592.72 $2,592.72 $800.00 $1,792.72 $8.25
March 2009 $1,800.97 $1,800.97 $800.00 $1,000.97 $5.10
April 2009 $1,006.07 $1,006.07 $800.00 $206.07 $1.02
May 2009 $207.08 $207.08 $207.08 $0.00 $0.00


I put what you owe on your car--I guessed at 6% and made the payment be $800

now here is it with your payment now
August 2008 $7,256.00 $7,256.00 $1,068.00 $6,188.00 $31.53
September 2008 $6,219.53 $6,219.53 $1,068.00 $5,151.53 $25.40
October 2008 $5,176.94 $5,176.94 $1,068.00 $4,108.94 $20.94
November 2008 $4,129.88 $4,129.88 $1,068.00 $3,061.88 $15.10
December 2008 $3,076.98 $3,076.98 $1,068.00 $2,008.98 $10.24
January 2009 $2,019.21 $2,019.21 $1,068.00 $951.21 $4.85
February 2009 $956.06 $956.06 $956.06 $0.00 $0.00


I realise you don't have the $800 now but you can see how fast that snowball knocks out a carloan AND with a car paid off if you want you can save $$$ on insurance by not having full coverage or upping your deductable.

If you have to want months to start then your balance will already be lower so payoff will be even faster.

[MomToTwoBoys]

I agree with Cricketlegs. Debt consolidation, then bathroom renovation, car loan #1 and then 2, then the student loans.

[CRS]

Just wanted to say thanks to Cricketlegs for that link!

[beks37]

Yes, Cricketlegs thanks for the link. I just went there and plugged in all 5 debts and based on paying off the lowest balance first and I was AMAZED that it said it would take 47 months to pay it ALL off. All 85,000 of it. I told my dh and he is for sure on board with this plan.

[Cricketlegs]

You are welcome. I got the link from this site and have used it for almost a year.

I love playing with the numbers.

[Cricketlegs]

I agree with Cricketlegs. Debt consolidation, then bathroom renovation, car loan #1 and then 2, then the student loans.

Whoopsie I think you mean lady kemma(did I spell that right?)

But hey I always accept thanks--anyones lol

[cheles2kids]

this is what i would do

debt consolidation
bathroom renovation
car loan 1
car loan 2
student loan

Ditto.
This is how I would do it.

I think it's awesome that you're thinking and planning ahead now, so that you know exactly which direction to go in, once that money is freed up, so to speak.

[missmanny]

Thanks Cricketlegs - great link. I'm going to send this home and play with it tonight (love the way it tells you about the different between paying the lowest APR and the smallest debt) it opened my eyes

[Fitgal827]

Thanks for that link, Cricketlegs!