Budget Question -- Where do I go from here?

[Preston]

Here is my current situation:

I am about to close on a house within the next week.

There is about $12500 in my checking account
There is about $4000 in my savings account.

I will claim the $8000 tax credit for first time home buyers via amended tax return. Probably get this by August.

I will be putting about $10000 into down payment and closing costs (possibly a couple hundred more but a negligible amount at this point.) So I will have $2500 in my checking to cover moving/settling expenses. This is overkill so I am going to make a big debt payment.

Here are my current debts. (All CC's, since I'm knocking those out first)

$8800 Fifth Third Bank at 8% interest Life of Loan BT
$1750 US Bank #1 at 0% until Sept
$1600 Citibank at 0% until Oct
$3500 Bank of America 0% until Nov
$4600 US Bank #2 at 0% until Jan

I am finding I have $1500 surplus factoring in my budget right now and leaving room for comfort with moving/getting settled. I am stumped as far as which debt I should throw this amount to.

My wife and I currently bring in about $3600/month and usually have about a $1800-$2000 budget surplus to apply toward debt per month.

I was thinking about just knocking out the low balances but I am also considering that it is not costing me to float those debts until closer to their expiration of the promotional rates.

I was also thinking about just using the $8000 tax credit to wipe out the Fifth Third balance...

Thoughts and Advice???

[kmonokwe]

Seems pretty straight forward. Use the 8k for the big loan, and pay off the rest - if you have $2000 extra every month, and you go in order, you'll pay them all off before they begin accruing interest anyway.

[momofslg]

I agree

[Debbie-cat]

I agree

[FrugalMomof3]

I also agree! Just stick with that plan and it will be paid off in no time.

[frugalwarrior]

I agree but make sure you don't get too tight berfore you "get to know your house". Things pop upout of no wear w/ a house even if it has been well maintained. Plus beware buying a house makes women prregnant.Even If they didn't think they wanted kids. LOL

[rowdy35]

save a little something to factor in the higher utility and maintenance costs of home ownership. Do you have an oil tank which you need to fill or some wood you need to buy ? do you have to pay utility bill deposits, etc?

[cheles2kids]

I know I just posted this in your other thread as well. But first & foremost, put some of that money away in an Emergency Fund (not to be touched) and *then* pay off your debts.

Trust me, not having an EF set aside for whatever might come up is a very scary thing. We are working diligently right now to get ours funded.

So please consider this a priority before you begin to get too wrapped up in paying off your debts.
As important as that is, an EF is even more so.

Good Luck!!

[Preston]

EF is already in place -- it is a 'baby' of about $1500 that is not figured into this. I put at least $100/paycheck in and I that is not a factor in our budget. Our income is usually $3800 so but I do not see the $200 a month that is going into savings..

Don't worry, my finances are under control....

wow... I just typed that sentence and the reality is hitting me of the entire situation... haven't been able to say that for about 8 years now.

[Michelle68]

Don't worry, my finances are under control....

wow... I just typed that sentence and the reality is hitting me of the entire situation... haven't been able to say that for about 8 years now.

Good for you, Preston, and congrats on your new home.

[itlw8]

this tax credit confuses me as a credit it comes off taxes owed right so If you only owe 3000 taxes for the year does that mean you can only get 3000???

[Preston]

the first time homebuyers tax credit is $8000. So if you owe $3000 you would receive a tax credit off setting the amount owed so you would get $5000.

If you purchase a house between Jan 1 2009 and Dec 1 2009 you can claim $8000 for first time homebuyer tax credit. you can do this either in 2009 tax year or file an amended return for 2008 to get it earlier.

[miss_cas]

You need to have 6-12 months of emergency fund now due to the economy and job situation. You are taking a real risk. If you have pets, an older car or own a house, an emergency fund is manditory or the next unexpected expense goes on the credit card and you get no where trying to pay it off.

At least, read "The Total Money Makeover".

[strezzed]

Beware those trips to WalMart for stuff "for the house". This is where DH and I got nailed on our first home. We blew our budget almost every month in the first 3 months of homeownership.

[Preston]

I have red The Total Money Makeover and I do believe Dave gives good advice -- however it is not universal.

I do have an EF in place which I am continually putting money into. Also, my EF is not necessarily cash in the bank. I bought a car recently for $100 and I am able to fix it up myself and my out of pocket expenses will be $300. Now, the car is a 4 cylinder and gets excellent mileage (just got over 400 miles on last tank) about 34 mpg. My wife is using this in leiu of her 8 cylinder good car for the time being but this car may just be sold probably able to get at least $1000 if I need to...

My bike remains my primary transpotation. I have stripped my budget pretty clean and I stick to it pretty well.

Despite the temptation, we do not simply go out and get 'stuff for the house'. We have a 10% coupon for Lowe's which we are writing down stuff we will eventually need but not yet... so we can get the most discount on this shopping trip...

But we have found that garage sales are awesome for cheap cheap furnitue and household goods.

In the past month we have gotten a portable dishwasher, a new king side bed, box spring and frame, a few picture frames, a book shelf, a blender, juicer, food dehydrator, 2 ceiling fans, a brand new christmas tree, a wine rack, a wine refrigerator, a jack and jack stands for the car (so i can do my own oil changes), and a GOOD set of dishes for less than $400.