10k bonus, what would you do with it?

[Trouble Maker]

If the debt is the same and the CC payment is lower with higher interest than the car then the total interest paid in the end for the CC will be much higher than the car. That's why everyone is saying CC. The same is true if the payments are the same i.e. you take the 'extra' money after paying off 1 of them and put it towards the other. That's why, if you are trying to get out of debt you always pay of the higher interest card first. It's called debt snowballing.

http://consumerist.com/cgi-bin/mt/mt-search.cgi?IncludeBlogs=1&limit=20&search=debt+snowball

 

If he has 10k in CC debt, I think it's a pretty easy answer. Pay off the CC and destroy it. The last thing he needs is another CC.

 

10K on a car gets paid off very quickly at 700 a month.

 

After you pay off all of your debts, assuming this is all of the debt you have other than a house if you have one, save up an emergency buffer. As long as you are comfortably living without that 700/month, put all of it into savings. What people typical say is ~6 months. After that, keep putting that money into savings and use it to buy stuff you want, or invest some or whatever. That's $8400/year into savings. It's actually $9100/year if you get paid every week/other week and automatically put it into savings every pay check.

 

So to sum up and show you a plan.

Pay of CC now and put extra money from CC payment into car.

So your 10k car is now getting paid off at 700/month. You're debt free in another 16 months.

Start saving up a 6 month buffer. Let's just say that's 10k. You're debt free and have a 6 month emergency buffer another 16 months.

So a little less than 3 years out from now you are debt free and have 700/month you can spend on whatever you want!

[Got-Boost?]

+1

 

Pay off the CC.......THEN.......CUT IT UP!!!

 

Then take that extra $250 payment and put it towards the car principle and pay that crap off QUICK! Once you have no debt, start racking up that $700 a month until you have a nice nest (egg 3-6 months of bills).

 

Then start investing....

[evan9381]

and just to update this, apparently the CC gods wanted to spite me...went out today to see if the mail from yesterday was taken in...it wasnt. in the mailbox was a CC offer mailed to my GF (who has very little credit, no where near what mine is) for 0% purchase and balance transfer for 18 months, and no annual fee...i saw it and laughed since i was just talking about this last night.

[BrianZ06]

I just did a cc transfer from a chase cc to citi bank for 0% 12 month,no fees. 3% charge. After the 12 month is up it will still be almost 1% lower then the chase. By then there might be another deal to consider, and to the original poster pay off that cc.

[RC K9]

Pay off the higher interest loan. I listened to this a few weeks back on NPR. Interesting stuff.

 

http://marketplace.publicradio.org/display/web/2009/09/14/pm-loans-q/

[Bam]

OP...Pay off highest interest rate debt first, no matter what the minimum payments are on everything else....unless you can't afford the minimums on something.

 

I just did a cc transfer from a chase cc to citi bank for 0% 12 month,no fees. 3% charge.

 

My gf did this exact thing a few months back.

[Supplicium]

and just to update this, apparently the CC gods wanted to spite me...went out today to see if the mail from yesterday was taken in...it wasnt. in the mailbox was a CC offer mailed to my GF (who has very little credit, no where near what mine is) for 0% purchase and balance transfer for 18 months, and no annual fee...i saw it and laughed since i was just talking about this last night.

 

yeah i get atleast 1 a day from either citi chase or amex. my gf gets em from amex daily aswell.

[John Bruh]

i have been getting amex shit non stop for like 3 months.

 

 

but yeah, pay off the credit card. As stated above then take the $250 and apply it to your evo (im assuming thats your auto loan).

 

Or balance transfer again and again. I just got a 1% balance transfer with no 3% fee from state farm bank.