Pay off low interest credit cards or higher interest loans?
So this is the new dilema. I have now paid off all my high interest credit cards, and I need to decide whether I should work on the remaining credit cards, or start paying off my other higher-interest loans. My credit cards are at 0% and 2.99%, for the life of the loans. Well, the 0% requires me to make 3 purchases a month to keep that rate, but I have it set up to buy one iTunes song ($0.99), one WalMart song ($0.88), and I got credit protection, which costs $2.99 a month (that's a side issue--is credit protection worth it???). This is far from perfect, but it's also not the worst deal in the world.
My car loan, which is now at about $4,000, has an almost 10% interest. I know, that was a horrible deal. I will pay almost $400 in interst this year on that car.
God, it makes me so angry when I see how much money I give away.
In about two months, I will get a check for approximately $1200 from work for the class I am currently taking. I only have about $400 a month outside of debt and (minimal) expenses. Even with the $1200, it would take about eight months to pay off the rest of that loan.
Other factors to consider: I'm almost certainly going to Hamline in September. At that point, I can defer my student loans. Also, I should be getting a promotion in October. Also... I could (a very small voice is telling me) stop contributing to my retirement.
Ah!!!!!!! I'm going for a run.
1 comments:
As far as I can tell there are two schools of thought when it comes to paying off cc debt. One is to attack the highest interest rate first. The other is to attack the lowest balance first. This is more emotionally-driven than math driven but can give you a real sense of accomplishment. Me, I chose the latter because I got a rush when I closed in on and then paid it off.
IMHO, cc insurance is not worth it.
Any consideration of selling the car and buying a used one with the cash? This would eliminate that payment. (I say this with hindsight...I'm still paying for a car I haven't owned in three years).
I'm sure you'll find a solution that makes sense for you. Good luck.
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