What would you do?

**PrairieGirl** · 02-15-2009, 07:08 PM

I have a bit of a dilemma:
I'll be getting 2 cheques in the next month or two worth approx. $3000 each. I have 3 things that I'd like to put that towards but am not sure exactly which.

I have a line of credit that is at $16,500 (min payment $500; interest 8.25%), a student loan at $3000 (monthly payment $115; interest...not sure exactly but its low), and a Visa CC at $3000 (min. payment approx. $60; interest 19.50%)

I was thinking of paying off the Visa CC because of the high interest

but then I'm not sure what would be smarter

: the LOC or the student loan?

Any advice???

**lisettelovebug** · 02-15-2009, 07:23 PM

Do you have an EF? How safe is your job? These are things to consider before paying off that debt. If you have at least $1000 baby EF(this is what DR suggests) then I would pay off the student loan and the cc at $3000. This will give you $185 more you can put on the larger cc debt each month. If you use $3000 to pay down the larger one, you are still going to have a large min payment plus the student loan payment. Plus not owing on student loans is a good thing because they are not dischargeable in a banktuptcy (at leasr here in the States).

**PrairieGirl** · 02-15-2009, 07:30 PM

Originally Posted by lisettelovebug

Do you have an EF? How safe is your job? These are things to consider before paying off that debt. If you have at least $1000 baby EF(this is what DR suggests) then I would pay off the student loan and the cc at $3000. This will give you $185 more you can put on the larger cc debt each month. If you use $3000 to pay down the larger one, you are still going to have a large min payment plus the student loan payment. Plus not owing on student loans is a good thing because they are not dischargeable in a banktuptcy (at leasr here in the States).

I have $2000 in my EF and my job is secure but I am going on mat leave in 3 months, so thats why I'm kinda stuck as to what to do.

I was thinking though, exactly the same thing you were (re: snowballing the two other payments onto my LOC by having them paid off!!)

**dcompton** · 02-15-2009, 08:20 PM

Will all of your leave be paid leave? If by any chance it's not, I might tuck away another thousand into the EF. But if that's good to go, I think I would pay off the high interest CC as the first priority, then the student loan, or as much of it as possible. That would allow you to focus all your efforts on just the LOC.

**lilk** · 02-15-2009, 08:41 PM

I agree with lisettelovebug. Pay off the cc and student loan. Apply the extra 185 to the LOC. Good luck with whatever your decision.

**Jenna** · 02-15-2009, 08:55 PM

I have $2000 in my EF and my job is secure but I am going on mat leave in 3 months, so thats why I'm kinda stuck as to what to do.

I would pay off the high interest c/c debt of $3000, and then save the rest.

If you weren't pregnant, and going on maternity leave, I would suggest sending $2k to the LOC.

Since you are going on mat leave, I would save the other $3k. At least until you are safely through the delivery, and back at work.

That way you have a $5k cushion of savings, and can hopefully comfortably pay your bills while on leave. Once the paychecks start rolling in again, then take a portion of your savings and throw it at the debt w/the highest interest payment.

**phoeny_moonstar** · 02-16-2009, 02:42 AM

I would definetly pay off the student loan and the cc and then use the "extra" money to send to the LOC and pay that down. IMHO

**PrairieGirl** · 02-16-2009, 08:21 AM

Thanks for all your input!!!!

I'm glad my thinking was on the right track!

**Greebo** · 02-16-2009, 08:28 AM

I don't agree. Don't be shocked - there's a reason I'm not advocating paying the debt off right away.

Because you are pregnant - there's always a risk of something unexpected and unpleasant happening. Right now I'd be saving as much as possible, *JUST IN CASE*.

Then, after your baby is born and you know they are healthy, you take that money and knock out the debts smallest to largest, and take the old payments and apply them in a snowball. You could knock out two debts in one fell swoop and have quite a bit extra each month to put towards the last one.

**HomeschoolMom** · 02-16-2009, 11:04 AM

I think some of you missed that PrairieGirl is Canadian. Fortunately she'll have 65% (minimum - some companies top you up to 90 or 100%) of her full pay for her maternity leave for a full year.

Hospital stay, doctors visit, vaccines, etc. are all covered by her provincial health care plan. The only issue would possibly be with prescription medications but if she has a medical plan that wouldn't be an issue either.

For me, I would pay off the student loan and credit card, then add the extra to the LOC.
Just my 2cents!

**FrugalMomof3** · 02-16-2009, 03:25 PM

I would pay off the $3000 CC and also pay off the $3000 student loan, that knocks out 2 debts in one, use the monthly payments you were making on those 2 and add them to the Heloc payments till that is done. At that rate adding an extra $165 a month to principle on the HELOC will knock off a little over a year of paying.

A note on HELOCs, I had one at one time and while I thought it was a good idea the payments were almost all interest and if we hadn't refinanced the house we would probably still have that loan, a heloc is not a good idea, JMHO.

**mombottoo** · 02-17-2009, 09:30 AM

If it were me I would pay off the high interest rate card, then pay off the student loan...

**kmonokwe** · 02-17-2009, 09:54 AM

I think Greebo has a good point. If you put the entire chunk into savings for now, you are covered during this possibly volatile time, and you can always come back and use that money to pay things down once normality is reached again.

Congrats on the baby! Good luck managing things this spring and summer.

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