I have 12k dollars. What bills should i pay? Suggestions please, thank you.?
isaiah davis Asked: I have 12k dollars. What bills should i pay? Suggestions please, thank you.?
I have 12000 dollars and im looking to pay off most my bills. Here is what i owe.
Not much thankfully. I'm very lucky.
Car – 10600 (interest rate of 6.5% and monthly payment of 320)
Installment loan unsecured – 4060 (interest rate of 11.2% and monthly payment of 170)
Credit Card – 3900 (interest rate of 11.99% and minimum monthly payment of about 95)
Hospital Bill – 985 (no interest rate, but a montly payment of 50)
I came up with a few options, but i want to hear suggestions please. Should i pay off my car? Should i pay everything but the car? Should i pay certain bills and not others? What would you do? Thank you.
Answers:
Key things it depends on are:
(1) what you're currently earning outside of the 12k. If you're still earning, then paying off all your bills in advance is rarely the way to make any money.
(2) what you'd put the rest of the money towards if you didn't pay off all your bills. ,…..
eg. if you're going to otherwise just fritter the $12k away and / or you're not earning anything else then pay off as much as you can of your current debts, non-interest paying in exception.
Either way, pay off the credit card (note, the real value in this is only if you don't take the same value off the credit card tomorrow or any time soon). (but don't necessarily cancel it….can be good for your credit rating if you keep it, even if you're not using it)
Second in line, pay off the unsecured loan.
For the car, assuming you still have the car and it's worth anything, then at least you have some security against the loan, and the rate is low, so low priority to pay off (go back to my two points at start)
For the hospital bill, unless it's affecting your credit rating or something, since you pay no interest on it…well, why would you put their cash in their account any quicker rather than keeping it in yours?
I would pay off the car first since that costs you the most each month. I'd roll the $320 each month into a snowball debt repayment plan. The rest I'd pay off based on highest interest first. Why pay a bunch of interest when you don't need to.
1~Car
2~Credit card
3~Installment Loan
4~Hospital Bill
After those are paid off work on starting an emergency fund. You can even take $100 month while you pay off the debts and put it in an emergency fund so than when debts are done you have money in savings. Also don't close your credit card once it's paid off. Keep it open and charge maybe $20 month on it and pay it off in full each month. Still having payments will help your credit score.