what should i do next?

[mkkl19]

I am pretty new here. I have been lurking a lot but not posting much. Anyway, we have our EF almost funded $800 now still need $200 more. We have several different kinds of debt and I am wondering in what order I should be taking care of them.

-$600 credit card (I would assume this is first)
-$3000 credit card (second)

Here is where I'm not sure
-$6000 car loan
-$13,000 student loan DH
-$1,500 student loan DH
-$5,500 student loan mine
-old medical bills from 2006, they are in collections, I believe the are around $6000
-$55,000 house(I would assume this is last)

All bills and payments are being paid on time. I have been paying any new medical bills as I receive them so that we don't have any more going to collections. But the ones in collections I have not been paying on.

Any advise is welcome.

[FrugalMomof3]

What are the interest rates on the loans and credit cards?

[MomToTwoBoys]

If the medical bills are in collections, I'd make them a first priority. Stuff like that really hammers on your credit rating also. My mother can't get a credit card because of past medical bills that were left unpaid.

Go ahead and post the interest rates and the payment amounts on the other loans, and we can go from there. If you're looking at paying a debt snowball based on interest rates, it's good to hit up the smallest amount with the highest interest rate first. If they're all the same interest rate, hit up the one with the smallest amount first. If the smaller amount has a lower interest rate, pick the higher amounts first.

[mkkl19]

$600 cc 26% OMG min. payment 25.00
$3000 cc 22% OMG min payment 80.00 but currently am paying 125 with an auto pAY
$1,500 sl 7% mp 46.78
$5,500 sl 7% mp 87.65
$13,000 sl 4% mp 121.50
$6000 car 12% mp 278.89
$55,000 house 7.25% mp 493.95 but I pay $500
I don't know if there is interest on medical bills but I don't think there is.
I am not really worried about my credit. We just bought the house and don't have any plans to buy a car (knock on wood)or get any more credit cards.
Our snowball will be $300 starting in September.

[rachelj]

$600 cc 26% OMG min. payment 25.00 first
$3000 cc 22% OMG min payment 80.00 but currently am paying 125 with an auto pAYsecond but pay minimum till #1 is gone
$1,500 sl 7% mp 46.78third
$5,500 sl 7% mp 87.65 fourth
$13,000 sl 4% mp 121.50sixth
$6000 car 12% mp 278.89seventh
$55,000 house 7.25% mp 493.95 but I pay $500
I don't know if there is interest on medical bills but I don't think there is.
I am not really worried about my credit. We just bought the house and don't have any plans to buy a car (knock on wood)or get any more credit cards.
Our snowball will be $300 starting in September.

This is what I would do

[Russ]

CC 600.00... 2
SL1 1,500.00... 6
CC 3,000.00... 13
SL2 5,500.00... 22
Car 6,000.00... 23
SL3 13,000.00... 35
Home 55,000.00... 73


How I would do it. Last number in each row is how many months to pay off assuming a constant $300 snowball.


or...

CC 600.00 ... 2
CC 3,000.00... 10
SL1 1,500.00... 13
SL2 5,500.00... 22
SL3 13,000.00... 35
Car 6,000.00... 25
Home 55,000.00... 73

[mkkl19]

Thanks for answering, but when do we pay off medical bills in collections? (After cc, before everything else, after everything except the house, after everything else is paid off.)

[rachelj]

after everything but the house

[Cricketlegs]

Thanks for answering, but when do we pay off medical bills in collections? (After cc, before everything else, after everything except the house, after everything else is paid off.)

I would just make minimums to the collections until everything but the house is paid. The damage is done there so all you can do at this point is pay them off. There shouldn't be any interest there either but the credita cards and loans do have interest.

Make every dollar work for you.

When you are digging out, that usually means you are already in poodoo so just make a small monthly payment to collections. They may hem and haw but oh well, you can't squeeze blood out of a turnip. They will be glad to get a steady payment and leave you be soon enough.

REMEMBER to keep a record of every payment made whether it is a canceled check, a bank statement, or online payment printed out and a current balance too.

Never trust collections, they tend to be morons--excuse me for saying that but if someone goofs up you will not get credit without the paper to back it up.

Welcome and congratulations on your decision to live the good life--the one without debt, worry, and bills!

[Cricketlegs]

Oh! Type your numbers in here and plan it all out!

http://www.whatsthecost.com/snowball.aspx?country=us

[Greebo]

Gonna break stride just a little here, but also do some explaining.

First, I'm with Russ - payoff in balance order - but for one thing. I'd move those medical bills right into line after or before (depending on the balance) the car.

Ok - why balance order? That's what hasn't been hit upon. Simple - psychology. Either way, #1 is a quick win - great - but #2 is, if you go by interest order, gonna take you almost a full year to pay off with your snowball. On the other hand, killing a student loan, FAST, in 6 months, is a big motivational kick, sooner.

Either way you decide, however, the important things are stay focused, and do NOT continue using debt for anything if any other possibility exists. Take extra jobs, sell stuff, I don't care - but get rid of the debt. It's not your friend.

One other thing - don't snowball the house. After you pay off everything but the house, its time to put the finances in better shape. That means full EF (6 months expenses), and then setting up retirement investments and college savings for the kids if any.