debt order payoff priority question...

**frugalbabe** · 08-21-2008, 02:48 PM

Ok calling all you financial budget wizard types I need some opinions on the order I have put my debts to pay off. This is what my plans are: and I am aware some of these are stupid debts this was before we were reformed spendthrifts! OK *big swallow* here I go.

1. DVD movie subscription $700 left (will be paid off next month)
(will gain a $40 snowball)
2. CC $3,600
($250 snowball)
3. van $6,000
($210 snowball)
4. truck $8,500
($220 snowball)
5. secondary mortgage $48,000
($400 snowball)
6. student loans (don't know exact balance)
($200 snowball)
7. primary mortgage $98,000

A little more info: we make $4,400 a month net and by keeping careful track we manage to save every month so I'm not worried about paying the bills. My main question is do you think the student loans should come before the secondary mortgage? I would like to get the secondary knocked down just because we have no wiggle room if we decide to sell the house we have to sell it at its max value because we still owe so much on it and houses aren't selling in our area and yes there is a possibility we will be having a move in our future. The student loans I don't really care so much about because it is an easy payment and they are easily deferred if we ever had a disaster. Anyway educate me please does this seem like a good order or am I missing something?

**Russ** · 08-21-2008, 02:56 PM

good debt reduction calcualtor>>http://www.vertex42.com/Calculators/...alculator.html

To pay things off quickly snowball as much as possible into the one with the lowest balance paying the minimum on the others.

**Greebo** · 08-21-2008, 03:06 PM

What russ said.

**frugalbabe** · 08-21-2008, 04:22 PM

Yeah I know the snowball method and that is what we're doing my question is the secondary mortgage is more than the student loans but I need the wiggle room in the mortgage area more than I need the student loans paid off. Does it sometimes make sense to pay off a larger loan than a smaller one? I think we're doing it right just wanted to see if there was anything I wasn't seeing.

**Greebo** · 08-21-2008, 04:26 PM

Why do you need wiggle room in the second mortgage?

**frugalbabe** · 08-21-2008, 06:13 PM

Originally Posted by Greebo

Why do you need wiggle room in the second mortgage?

I think there is a good chance we will be purchasing a new house/land so then we would sell our existing home. Right now our mortgage really makes it that we would have to sell the house right at the $150,000 mark which has been hard in our area. If I didn't have the second or if it was at least paid way down then we would have more leeway at what we could sell our house at. Our house has been appraised at around $170,000 but in our neighborhood we would be lucky to get $150,000 with the way houses are going right now.

**Greebo** · 08-21-2008, 08:37 PM

In a soft real estate market?

Bad idea.

Land is just land. There will be more land. You do not want to put yourself in a "we've got two mortgages" situation when the market is soft. Please trust me on this one.

You'd be better off finding a buyer, moving into an apartment, renting, then finding the land and buying it then you would be having 2 mortgages, which is what you'll end up with if you buy now and then try to sell this year.