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Subject:  Re: cash flow vs. interest rates Date:  7/10/2014  3:34 AM
Author:  aj485 Number:  308344 of 312988

I have one year left on a car loan at 3.99%. The remaining balance is 4+k. If I really stretch my budget this month (raid my pantry, limit car trips, suspend savings, etc) and then raid my pockets, piggy bank, and the couches, I can pay it off. The monthly payment is $527.22. Or I can just put 2.5 - 3k towards my highest interest credit card (15.24%) reducing the balance as I have been doing.

Freeing up that extra $500/month would give me 6k to put towards debt over the next 12 months.

That $522.27/month is already going toward debt repayment. It's paying off your car loan. You won't get any 'extra' to put toward debt repayment, that you couldn't realize by stretching your budget this month and putting it all toward the 15.24% card.

In fact, if you stretch right now to come up with the extra $3.5k toward the 15.24% credit card that as of 6/30 had $13,500 on it, in addition to the $2.5k that you say* you have been putting toward that card, you will pay it card down by over $6k in one month - you will be down to about $7500.

*When you first came here 3 months ago, you had a balance of $23,500 on the AMEX. By the middle of April, the AMEX balance was down to $14k, according to this post: 2 1/2 months later on 6/30, you said that the AMEX balance was now down to $13,500 in this post:

I know you said you had a 'hard time sticking to the plan'. But either your numbers were wrong in one or both of those posts, or you have only paid a total of $500 more than the interest accrued on AMEX in 2 1/2 months. Since $14k at 15.24% only accrues about $180/month in interest, that means that you have only paid AMEX between $860 and $1040 in 2 1/2 months, depending on if you had 2 or 3 monthly payments due.

Unless you've been adding charges to the AMEX (which you *said* you had stopped doing) there is no way you've been paying AMEX $2.5k - $3k/month.

If you want to succeed in your endeavor to pay off your debt, you really need to start being real with yourself about how much and what you are paying. If you really want to pay off the debt in interest rate order, then do it. It's okay if you want to pay some debts off out of order because it gives you an emotional lift, and more motivation. But be truthful to yourself about it and put a plan together that shows that. Don't tell yourself you've been paying AMEX $2.5k - $3k/month when you haven't.

If you had really been paying $2.5k - $3k per month to AMEX without adding any charges, you would be well below $10k on the AMEX by now, and if you scraped everything together for the next 2 months, along with the $2.5k - $3k that you were going to pay, you could probably pay it off next month. Instead, you are still at $13.5k

So, you need to decide - what's really more important to you - paying the least in interest, or paying off particular debts? And then, be truthful to yourself and put a plan together to support that goal, and stick to the plan.

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