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  1. 08-01-2008, 12:16 PM #1
    Russ
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    Default Loans - pay 0% or variable first?

    2 loans -

    truck - balance is $26,765 - 0% interest. Payment is $505. 42 payments left.

    HELOC - balance is $24,350 - 5.25% interest tied to prime (in other words, can go up.) minimum payment is the interest. this month ~$103.

    Which to pay off first with a snowball of $1350/month?

    I think I know the answer, but wanted to see responses.
    Russ

    Truck payments: 10 9 8 7 6 5 4 3 2 1 WAHOO!
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  2. 08-01-2008, 12:21 PM #2
    The Muse
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    Will you have the truck paid off before the 0% interest period runs out if you pay down the other one first? If the answer is yes, I'd pay down the HELOC first.
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  3. 08-01-2008, 12:42 PM #3
    MomToTwoBoys
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    I'd pay the HELOC first. If the 0% balance will be for the life of the payments on the other loan, I'd go with the HELOC.
    Wife to DH since 10/31/2002!
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  4. 08-01-2008, 12:54 PM #4
    Greebo
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    The heloc goes first no matter how you snowball - higher interest or lower balance.
    If you could kick in the pants the person responsible for your problems, you wouldn't be able to sit for a month.

    Did you know that a 4 year student paying $20,000/year who finances their education graduates with over $103,000 in debt to start? But a student who works and pays cash and takes 6 years to graduate ends with $6,300 in their pocket! So much for "getting a head start by financing!"

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  5. 08-01-2008, 01:36 PM #5
    FrugalMomof3
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    I agree with paying the heloc first, then the truck.... since your heloc has an adjustable rate, paying that much each month will knock it out in no time!
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  6. 08-01-2008, 03:18 PM #6
    mombottoo
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    Of course you know the answer Russ ! But, since you asked obviously you pay off the one with the interest tacked on first.
    "Life is what happens while you are busy making other plans." John Lennon
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  7. 08-01-2008, 06:35 PM #7
    elphie
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    ditto with everyone else on the HELOC first but I would add...

    A 0% loan is not bad debt as long as your balance stays below the value of the car so you can get what you owe in case of an accident or the need to sell. We have 0% for the life of the loan on our car so we never put extra money toward paying that off. We put it toward our mortgage which does acrue interest or we put it into our EF where it can actually earn interest.
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  8. 08-01-2008, 08:13 PM #8
    frugalfriend
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    Quote Originally Posted by Greebo View Post
    The heloc goes first no matter how you snowball - higher interest or lower balance.
    That is exactly what I was going to say!
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