received a bonus at work, what should I pay with it?
Date: Fri, 02/20/2009 - 09:31
I received a bonus at work for sales for 2008, and I would like some advice on what to do with it. We had planned on using it for a small construction job at our home that is getting pretty critical, but I couldn't sleep last night thinking about everything.
I am trying to refinance my homes and car, so I would guess that I should focus on doing things that would give my FICO's the biggest bump. My desire is to increase my FICO scores over 700, EQ is 712 but TU and EX are in the 680's.
Here is my financial outlook at this time:
Car Title Loan, 7,000 owed on a $3,500 loan, just got it last month, we were desperate and had to pay our mortgages and a medical bill
Credit Cards:
Chase 9.99% promotional, 27.24% on new purchases, so I don't use this card and am just paying it down. Balance $2,850, Credit Limit $7,500. Have had since 1997.
Capital 1 13.9%, Balance $1,100, CL $1,250. Had since 2007
Discover 10.99%, Bal $800, CL $700, Had since 2007. Only reason it went over CL this month is I was told the wrong date was the Statement Closing date, so my supplemental payment hit a day late!
AMEX 12.15%, Bal $4900, CL $5,000, Had since 2008. Yes I know I need to work on getting this paid down so they don't lower my limit, but I'm not sure paying on this card (my largest balance) is the right thing to do when looking at my whole picture?
Husbands B of A, I am not on this card. 9.24%, Bal $2,450, CL $2,500, had since 2008
Between me and my husband we make about $2,600/month and are super frugal, but always seem behind. We owe about $500 to a couple of businesses in addition to the above debts, so that has to come off the top of the bonus, leaving about $3,000 to do something with. But like I said, the main intent is to get our FICO's all above 700.
Thanks for any advice and suggestions you can give me!
reply
i would get discover down first.then work on amex,then capitol one is it?the reason i say discover first is getting that down would help as keeping it even close to what it is now will hurt your FICO.the others i would spread about as you see fit,but get that discover back in the black.
If you have a big bonus you can keep doing what you are doing an
If you have a big bonus you can keep doing what you are doing and find a way to invest that money for a maximum return on interest, maby for 1 year or so. That is one option.
The other thing you can do is pay some bills with it like you want to. Also you say you make $2,600 a month but are having a hard time getting by. One thing you should try is to open up a savings account. Try to put $50 a week in there if you can. If you have a tough week put less. Do this for one year and you could have over $2,500 in that account to pay what you can off. Cut things that you don't need such as cookies, junk food, buy cheap soda, stuff like that. Instead of ordering pizza, try to make your own, I can give you a recipe,lol.
It is little things that you really don't need in life that can quickly add up and take a big chunk of your money. You really have to sit down and look at what you spend. This will put more money in the bank and a quicker chance of lowering debts. After you get all your debt squared away, do the same thing again, $50 a week in the bank account, put more if you want. At one year take that money and go on a nice vacation to reward yourself with.
Hope this helps.
Spread it out around all the CC debt and get them all under your
Spread it out around all the CC debt and get them all under your limits as this is hurting your score.
Smo...the greatest benefit would be to keep your balances under
Smo...the greatest benefit would be to keep your balances under 30% of the limits. Spread the bonus around so that all your limits are below 30%.
MORE IMPORTANT to consider is that car title loan...if you don't pay it and you lose the car, how badly will that affect you? (Do you have more than 1 car? Do you need more than 1 car?) Car title loans are VERY expensive.
If you can get your FICO up, will that allow you to refinance your mortgage and auto (to get the title back)? It's not just FICO that determines if you can get a loan...it's also your debt to income ratio.
I'm worried that since you had to loan on your car to pay your mortgage that you may be heading into trouble. Please be careful.
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I know, the loan was my only option in January when I couldn't p
I know, the loan was my only option in January when I couldn't pay our mortgages without it ... everything I am doing now is to try and tide us over until we can refi the mortgages .... that is key to everything right now!
Am I reading your post correctly?...do you NOW owe $7k on that t
Am I reading your post correctly?...do you NOW owe $7k on that title loan of $3,500? What do you pay monthly/weekly on this loan? A title loan is as bad as a PDL...what is your plan to get this loan paid off? (IMHO, if you need the car, get it paid off as quickly as possible.)
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I guess I didn't explain well ... I got an installment loan for
I guess I didn't explain well ... I got an installment loan for $3,500 using my other vehicle as collateral. My husband and I have completely different work hours, and live 30 miles from our repective work places, so we have to have two vehicles. The monthly loan amount is about $290, and if we take the full 2 years to pay the loan off, we would end up paying back about $7,000 with finance charges and interest rates. But, say for example we pay it off in 2 months, we'll end up paying about $3,900. So I guess TECHNICALLY it is not a car title loan, but that is how I look at it.
My plan is to do everything I can in the next 5 months to pay down our cards to improve our FICO's, wait out the 2 year self-employment problem (which I'll hit in August) and then refinance the houses. Then we can pay off that installment loan and get that off of our backs.
What's the interest rates on the installment loan? If it's high
What's the interest rates on the installment loan? If it's higher than your credit card rates, I would focus on paying that one down first. $ saved...HOWEVER, the down side to doing this is you now have given up "access to cash" if you need it.
From a financial planning standpoint...I would do this:
1) Make a mortgage & car payment so that you are one payment ahead...that way if you hit a snag, you have a 30 day cushion.
2) Always have an emergency fund...like $500...usually enough to cover a deductible on your auto...just in case something happens...those curves that life throws at us can really upset the apple cart...you know...like...a flat tire...car breaks down, etc. :shock:
3) Then I would pay amounts to focus on getting your cc balances below 30%...
IMO, doing this will give you piece of mind knowing that your basics are covered and will optimize your credit scores.
In looking at that car loan tho...2 years of payments and you'll end up paying 100% more than what you borrowed! I understand why you want to get that paid off in a hurry.
NOTE: The reason I say make a mortgage and car payment now is b/c you have already experienced a situation where you were forced to loan on your car in order to make your mortgage. You have already stated that you need 2 cars...if you default they can repo your car...get yourself ahead of the curve and give yourself some breathing room. 5 months vs. 7 months...if you have to wait another 2 months in order to refi, that's okay. At least you'll have a place to live and cars to get to work...IMHO. Good luck!
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I just paid everything for March, plus quite a bit on the cards,
I just paid everything for March, plus quite a bit on the cards, so I am doing basically what you recommended. I realize now that I should have held some back for an emergency fund, but at least I've paid ahead on the important things. Thanks for the advice!