I'm going to get a good $2500 back from my taxes this year (most is an education credit). My question is do I pay off some of a credit card or do I pay down one of my student loans? Half of this is going to go to go to some licensing study guides and testing (for social work) so I'll have like $1500 left. The student loan is like $9000 and has an interest rate of 5% while the credit card has a balance of about $3,000 and has an apr of something like 14% (it was my first credit card). Which one do I use that extra $1500 on? I feel like perhaps the higher interest rate one may be the best option, but i'm not 100% sure.
Credit card and then cut it up. Is this really even questionable? You're paying the same amount off, so 14% you'll save if 2500 is better than 5% you'll save, unless you're just paying on the interest on the loan but still... pay the higher percentage debts.
Get rid of the credit card debt first as long as you are sure you are not going to run it back up. If you don't trust yourself not to do that then put it towards the student loan.
you've essentially answered your own question...since credit card debt is considered bad debt the best thing to do is pay it off as quickly as possible...always pay off the higher interest loan first.... student loans are considered installment loans by the CC agencies which means they won’t impact your score as much as credit card debt and if you choose to defer or put your loan into forbearance it won't hurt your credit score... When you pay off a student loan early they are missing out on the interest and your credit score may go down slightly if this is the only installment loan you have on your debt profile....
keep talking and Imma put them hands on you
student loan imho. my Jacob has been working for more than 8 years after graduation and he still owes money to the back in the form of "student loan". I think it's not just the higher interest rate that prioritizes the credit card over student loan, but also the fact that most credit card issuers are a bunch of assholes who would intentionally up your credit record for fun. It's your first credit card so you better be careful with it, tbh.
Pay most or all you can to which ever has the highest interest rate, which is probably the credit card.
Don't cut up the card, but stop spending with it except a real emergency. Will you have the cash if you need your car towed to a shop and repaired? If not, a perfect use for a credit card. Just one example for emergency usage.
Some people say you should keep at least $1,000 in a savings account for emergencies. Different people claim different values.
^
Fabulous. That was what I was thinking. I just needed to have it confirmed. And the student loans will be there for quite some time thanks to going to a USC for my masters.
I've got $2300 in savings right now. On my itty bitty salary I'm happy with that amount.
Never heard the $1000 figure. Usually 3-6 months salary is recommended.
But it is a good point to bring up for Ashbeeigh. You should always build a reasonable emergency fund before trying to become debt free.
I started to make a really mean comment about using that study guide money for a simple math course but decided to give it a serious answer instead. The obvious answer is to pay down the 14% credit UNLESS you are living paycheck to paycheck without any padding. At your age credit rating is more important than overall debt. I'd say bank the $1500 to give you padding to make all your payments perfectly on time and then transfer to credit card debt to a lower interest no fee card.
Passing this $400 test (and then the prep stuff that goes up to like $300) could increase my salary by $25,000. So no. But, thank you for holding back a bit.
reading further in, $2300 is good but add the $1500 to it. You will be able to weather temporary unemployment if necessary and still maintain perfect credit.
I gave you a serious answer Ashbee.
You did. Thank you. I appreciate the options that are available.
Yeah, build up that emergency fund. Now you can put any more money you get from now on to paying down the credit card faster.
Can't believe I'm saying this but I agree with Welfare Cobra...pay off the CC but keep that line of credit open unless you're too impulsive.
reading this thread has really opened my eyes to the misfortune of others. I didn't know that saving 1, 2, 3 thousand dollars was considered enough to help you in hard times....wow...maybe it's time I opened my eyes
You don't have to save anything, just ask Cedric Sr when you're in need...shouldn't be that difficult a task since you both live under the same roof.
sure brah...
They can't just ask daddeh for an allowance to pay for tsa's wings and whiskey like you.
People actually use their income tax returns to pay off debts? I use it to buy me new, shiny things tbh.
Whiskey and Wings...
I guess education is not that important to someone who signs his own paychecks but to me and the majority of us, every penny spent on education is a wise investment imho.
credit card. pay off everything else ASAP, but if you have to choose then you can let the student loans sit. i know for my grad loans they cut the interest down, but it was while i was still in school.
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