Personally I'd pay the one off that is is charging the most interest.

With more information I could help you a little bit better.

I would pay off the car loan first. Here's why:

Based on what I have so far.. you're paying about $415/month on the car and $143 on the Home equity loan.

So in terms of having more cash flow in the fastest time possible, you'd want to focus all your energy on eliminating the car payment.

If it was possible to put an extra $100, $200, or $300 extra on your car payment each month.. you'd pay it off
8, 13, or 18 months earlier respectively.

If you then rolled your car payment into the Home Equity Loan... you'll be saving anywhere from $5000 - $7500 in interest.

More info would certainly help..

How much extra do you plan on putting to one of these loans?

So, I was somewhat mistaken.
The car loan was taken out 2/2009 for 60 months. Rate is 4.89%. We financed $12500, and payments are $236.51 per month.

The home equity loan was taken out in 6/2005. Rate is 6.88%. The initial loan was $19,500. Payments are $150 per month.

The primary loan on the condo was for $175,500. Of course, we got a 5/1 ARM and now are just on an adjustable rate. I know I need to refinance it, but it's a hard proposition when the rate is 3.75% this year! Our principle and interest on that is about $800/month.

Now the students loans are another matter. The benefit is that they have been consolidated at about 2.875%. My plan is to pay these off over a very long period since the interest rate is so low.

So, I guess I owe more on the home equity loan rather than the car. But I can deduct the interest on my taxes. So, is it better to get the car paid off and then start tackling the home equity loan?

Thanks.

How much extra do you have budgeted so that you can attack these loans?

Just how much are you able to deduct from your taxes with the HELOC?

Have you looked into a REFI? I have seen rates at 3.75% for 15 years.


The truth is you won't be hurt if you pay anything off fast. The sooner you pay your debts the more money you will have. This includes paying your house off ASAP. Don't buy into the tax benefits of being in DEBT......remember the Borrower is Slave to the Lender

Lighthouse

Pay off the debt with the highest interest rate - always. If you do that you will save more in the long term on interest charges.

You could also look at refinancing due to the really low rates right now, it has a ROI of about 4 years depending on closing costs but it could be a way to roll in all of your debt into a lower rate than you currently have.

Thanks everyone for all of the input. I appreciate everybody's time to answer me.

So, at my current job I get a monthly salary, and then as part of our pay we get a lump payment towards the end of the year. This isn't a bonus as it's part of my standard salary.

At any rate, my thought would be to take that money to pay off the debt. It would be enough to cover the home equity loan or cover the car loan and have some left over.

But by paying off the home equity loan, there isn't much left for savings / investment.

Outside of an emergency fund.. if you have debt.. you really shouldn't be doing much saving or investing anyway.

If you're paying 6% on a loan and you're earning 6% on an investment... then you're really going nowhere right?

When you consider being in $31k debt and if your savings isn't that high, then you're going backwards... not forwards.

The best possible use of your money right now is to pay off all the debt.

THEN you have real money to save. You'd have at least $350 a month to save and invest with.. pair that with compound interest working for you.. and you'll start the ball rolling to build wealth.

We have about 11K in our emergency fund. I think that's enough to cover us for a bit, but with that in mind I do have disability insurance.

Anyway, it sounds like the plan is to get rid of the home equity loan first and then tackle the car loan.

I'll keep everyone informed as things improve.

That depends on your total financial picture. plus, what are the payments and how much cash do you have ? not enough info to make decision.

So, here's the lates break down:

We have 20k in savings right now. That covers 3 months worth of bills. So, we're going to hold onto that.

My spouse has 7.5k @ 4.5 % in student loan debt (payment is 236/month). Car loan is 8.3k @ 4.5% (payment of 250/month). Home equity loan is 16.7k @ 6.88% (payment is 150/month).

I'll be getting my end of year bonus this December. My plan is to pay off the student loan and the car loan, but wait until the summer to pay off the home equity loan. The reason why is for cash flow issues. I like the idea of getting an extra 480/month in cash rather than just 150/month.

In the long run we probably save more in interest by paying off the home equity loan first. But I'd rather pocket the extra 480/month, and by summer 2011 I should have enough money saved up to pay off the home equity loan, too.

What does the board think?

I know I'm kind of resurrecting an old thread here, but I wanted to post a bit of a success story. In the past year my family and I have really worked hard at tackling our debt. We had a 0% interest card that had to get paid off by November 2011. In total we had about $8700 worth of charges on it. Then we had a car loan of about $6600 and my wife's student loan of $5800.

In contrast to most Americans I was fortunate enough to have an improving financial picture. I finished up school and was able to start working.

In a year and a 1/4 we were able to systematically pay off the 0% credit card without accruing any interest. Then we started working on the smaller loans working our way up. We paid off my wife's student loan and we paid off our car loan. Finally, we were able to get some money into a savings account for the "rainy day" fund.

We still have a few liabilities such as my student loan debt, but that's at 2.875%. So, I'm not too worried about the debt right now. In addition we had to move out of the city where we were living because of my job. We still have a home there that's being rented out - couldn't sell the home. We have a home equity loan and a mortgage on it. If we pay off the home equity loan we won't be underwater any more on the house. So, that's our goal for the next 6 months.

Anyway, this forum has been helpful for me to build confidence that I can get out of debt and move along in life. Good luck to everyone out there.

Bobbyseal,

Congratulations on your forward progress and momentum! We often don't hear the success stories so thank you for sharing that!

Onward and Upward my friend!

__________________
"If nothing changes...NOTHING CHANGES! But if something changes...SOMETHING CHANGES!" - Mark Balmer

www.debtfreemarriage.org