Does this sound right?

**Hoosier Momma** · 04-10-2008, 10:07 AM

As you all know, we are getting back large refunds this year (almost $10K federal and almost $1900 between two states). Then we have our tax stimulus rebate of $2400 coming in next month, and I am cashing out a whole life insurance policy that will bring in over $2000.

We have about $17K in debt other than the house. We are planning on paying off as much as possible with the refunds and also putting $1000 into a starter EF next week.

Our two biggest debts are our student loans. Mine has about $3900 left on it...it has a 4% interest rate and the payment is $32/month. Dh's is right around $5000 and has a payment of $60/month at 7.22% interest rate. If we went with the snowball plan, we would pay off my loan first and then hit dh's with the snowball $.

We figure that we will have enough momentum going with paying off everything but the student loans that we should pay off dh's first because of the interest rate and then attacking mine at the end would go that much faster because of the extra $60 we would be able to put towards it on top of the other $500+/month we won't be paying out in debt payments. (That is one long run-on sentence

).

Is this logical or should we attack mine first and then dh's? I also forgot to mention that the time our kids are not in school this summer we will have an extra $500+/month that we will not make in tuition payments, but we haven't decided if we are going to use that towards debt or something else like home improvements or other funds.

**leezza** · 04-10-2008, 10:15 AM

You asked so here is what I would do.

put 1/2 of all refunds into a EF, (with the economy the way it is you never know if you may need access to funds).

Pay off DH student loan.

Pay off any small amounts.

JMHO,
leezza

**Samigirl** · 04-10-2008, 10:59 AM

I think your plan sounds like a reasonable one. I too, would pay off DH's loan first.

**Frugal Nurse** · 04-11-2008, 12:31 PM

I hope I have this right.
You will be anticipating $10K + $1900 + $2400 + $2000 = $16300.
You want to put $1000 in EF.
That means you $15300 +/- to pay down debt which totals $17K.
That means you will have $1750 remaining in debt. (give or take a few)

First! FANTASTIC!!!!

Second. Pay the highest interest first. Which, without knowing ALL your debt I'm going to say that your husband's school loan of $5000 should be paid. because at $60/mo- you've got a looooong way to go paying so sloooooow. This will leave: $10,300.

Third: Pay off your school loan of $ 3900. Because at $32/mo.... loooooong time. Leaving: $6400

Fourth: Use the $6400 remaining to pay off as many of bills starting with the smallest balances (snowball).

Fifth: Use the monthly payments you now have free (all I know of are the two of $60 + $32) to pay down the final balance of $1750. Without knowing how much you paid on the small bills- but seeing that you freed up at a minumum of $92... this final amount can be blasted through.

Sixth: Best of luck!

**amlitrocks** · 04-11-2008, 12:56 PM

The only reason Dave Ramsey suggests that you pay off the smallest amount first is to keep you super motivated by success. The way I see it you already have that motivation. Go ahead and do DH's student loan first. You should be able to knock it out quick and work on yours. Great job!

**kaykwilts** · 04-11-2008, 01:14 PM

Sounds like a good plan.

**dkhd** · 04-11-2008, 09:40 PM

I would save at least 2500 in an EF.
The economy sucks..and the extra padding is needed now a days!!

**Jenna** · 04-12-2008, 01:10 AM

I would pay the 4% student loan last... that assumes that 4% is your lowest APR.

Put $2k into savings, save the tuition money for "odd ball expenses" (home repairs, car insurance, etc.) Send the tax monies to your husband's loan and your c/c's.

**Frugal Nurse** · 04-12-2008, 09:43 PM

Good point on upping the EF account. After all... I think~ do what makes YOU feel good about your situation.
A nice cushy savings account for those 'bound to happen' incidentals (so you won't need to charge your car repairs) or no bills then rebuild.
But either way! you've got it made!

**lilk** · 04-13-2008, 07:04 PM

I agree with frugal nurse. It won't take any time to pay off the 1750, especially if you snowball it. If you choose to put the 2000 in EF, you still should be able to kick but on you snowball and only be left with the mortgage. Good luck, and let us know what you decide.