Saturday, November 20, 2010

Planning the next move

My current snowball is rolling on down the hill, and should be paid off by the end of the year.  This is the last of my student loans that I have with my Dad, and I just want them gone!

So, which debt is next?  Looking at the Credit Card debt, each balance is around the same (give or take).  The interest rates widely vary though.  The car?  Our retirement loan?  Student loan?

Using the Dave method, it would be the next smallest balance.....which would be the retirement loan.  Interest-based.....that would make it CC2.   I have an idea of what I want to do, but I am curious to see if you come up with the same idea, or maybe something I haven't thought of yet.  Let's do a pro/Con list for each.


Pro:  Once paid off, it frees up $358/mo towards other debt or saving for a "new" car for me (mine is 11 yrs old with 144k miles, and while I plan to drive it 'til it dies, at some point it will need to be replaced).

Con:  It is scheduled to be paid off in Dec 2011/Jan 2012 just making the regular payments.  Interest rate is only 5.74%, so we aren't saving a ton there.

Retirement Loan

Pro:  Frees up $210 a month.  Money goes towards retirement, so it can continue to earn interest.  Can either put this money into debt snowball, or re-instate retirement contribution.

Con:  Money was pre-tax, so it isn't really freeing up $210.  

Pro:  This has the highest interest rate (11.99%) of all our loans, therefore we stand to pay the most in interest here.  Paying it off saves on the "wasted" money to the CC company.

Con:  Dunno.


Pro:  Because about half of the balance is at a low (5.99%) interest rate, and the other half is 0% until next Novemeber, most of the payment is going directly to principal.

Con:  Since the rates are so low, the principal really won't gain that much interest if I continue to pay the minimum.

Student Loan #1

Pro:  This represents about 45% of the balance of our debt.  

Con:  This is the lowest interest rate debt.  Right now it is in interest only payments (until next October), so concentrating efforts here may not do much to reduce the overall debt in the next year.

Lending Club

Pro:  A quicker pay down would show investors that we are a "good" risk, and would increase our chances of getting a future loan, if we needed it. (but we plan to NOT need it, unless it is consolidating debt at a great rate with a quick payoff)

Con:  Dunno.

So there we are......what do you think I should do?


  1. Quick note - check your statement but retirement loan payments come out post tax not pre tax in most cases.

  2. Ours are pre-tax....the government retirement system works differently.