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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308519  
Subject: Re: Order of paying off? Date: 10/19/2013 2:59 AM
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AJ, this is gold! Thanks.

You're welcome :-)

Purchased for $156k in 2002; current value near $210k as assessed in 2010 when we refinanced the primary.
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Draw expiration date: 08/01/2017


Okay, so it appears that you would be reasonably safe from BoA either cutting your credit line as you pay down, due to a low CLTV, and from having the draw expire before you need to write the check. So, your original strategy would likely work - but given the stories I saw about people's credit lines being cut, I still get concerned whenever anyone says 'and at a future date, I'll write a check from the HELOC to pay off xxxxx', especially when not being able to pay off xxxxx has the potential to cost them a lot of money if they can't write the check. And given that your HELOC is your lowest interest rate other than the medical debt - I'd probably still opt to go with the plan of paying off your wife's car and then saving to pay off the BoA card.

What are the minimum payments on each of your debts?

Chase Mortgage: 1,324.49 (includes escrow)
Wife Car: 433.84
My Car: 305.00
BoA HELOC: 50.00 (intrest only, I have been sending $100)
BoA CC: $120
Medical Bills: 500 (over 24 months; 16 payment remaining)
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Total: ~2735 per month


So, paying off your wife's car not only pays off your highest rate non-mortgage debt, but it also frees up a pretty good size payment that you can apply to your snowball. That's a bonus!

The only pitfall I see with this is we have not been very good with a lot of money in our checking/savings. The e*fund I have set up is at a different credit union (I never turned on the on-line feature); that way it is always available, but we have to drive to a branch to get the money; but we would also have to drive to a branch to deposit money. I could do that on a monthly basis for the deposits. I hate to admit I am weak, but I have had > $5000 in savings before and eventually I feel rich and the budget starts to slip :$

Would it be ok, if I put this snowball savings in the e*fund account till the BoA payment is due?


If keeping the money in your e-fund account is what will work for you, then that's the way I would suggest you do it.

As far as putting money into the credit union account - Can you do direct deposit into the credit union account? I know my employer allows me to deposit into multiple accounts, so I have money going to 4 different accounts for different reasons. It's a lot easier than having to try to make special trips to make deposits. It's also easier for me to just have the money taken out of my paycheck before I see it - it's also less tempting to use it for other purposes that way.

The only modification I did was I am going to deposit the snowball payment into the e*fund to pay BoA just prior to the rate rising; Otherwise I am going to pay off my wife's car; then apply snowball to E*fund until BoA payment is due.

Next my car; Then HELOC; Since Medical Bills will be paid in full at 0% after two years I will target it last for snowball;


Yes, that sounds like it will work. Since the medical bills are on a fixed repayment plan at 0% - leaving them for the last item to snowball is pretty reasonable.

An added advantage to paying off my wife's car is that I can drop the coverage to just liability....checking with Geico...that would only save me $187 per six months. I will have to think about if it's worth dropping comprehensive for just a $31 per month gain.

Yes - you need to balance the risk of having to replace your wife's car if something bad happens vs. the savings. While you are paying down debt, you may not have the resources to replace the car without having to add to your debt or take a big hit on your debt repayment plans. If you think that replacing her car would not be necessary, it might be a risk you are willing to take. If you absolutely need both cars, then it may not be a risk that you are willing to take. It all depends on your risk tolerance.

Good luck, and let us know how it goes!

AJ
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