[USER]

What should I do with my $2700 bonus?? I’m thinking pay my car off (7 payments of $235 left) and pay our car insurance policy until our May 2025 renewal.

The monthly total for car and insurance is about $535 and we could start putting that additional amount on our credit cards and doing the debt snowball.

Isn’t that where you put the extra money towards the lowest balance until it’s paid off and then move onto the next card??

We pay about $750 in credit card bills Monthly. It has never been this much!!

We have a daughter in college and we’ve had some unexpected expenses that drained our savings and we had to use credit cards.

Our homeowners insurance has increased and our gas and electric bill has been much higher.

I have cut down all expenses that I can. I got rid of Sirius radio, Amazon prime, Netflix, stopped getting my nails done, cancelled phone insurance on mine and my husbands phone and I really try to plan our meals and budget groceries but everything is going up.

Open to any suggestions. The credit card debt has me stressed out!

Thanks!

[Lisa]

I thought I read somewhere that you pay off the debt with highest interest rate first and move down the line. Your plan sounds good.

If you can get your cards paid off (or down) by May, and can keep them paid off (or down), you can start building up your savings again.

[Danielle]

The Dave Ramsey way is pay the smallest balance first, so that you can put more money onto the bug one later. I don’t know why everyone says pay the highest interest first.

There is relief in momentum and having one less thing to pay.

Listen to Dave Ramsey, the budgetnista, remit, they all say what I just said.

[Janet]

Pay off highest interest thing first. That interest is only adding to your debt.

[Shelley]

You might want to put all 2700 on the credit card because the interest rate is higher than the car loan.

But freeing up the car payment to apply that payment toward debt is also a good choice.

I think you can’t go wrong either way!

[Nicole]

Call them and ask if they’ll work with you. Sometimes if you do auto pay they might reduce interest rate or find another way to help.

[Barbara]

?? Your car payment is $235? But car and insurance is $535?
Time to look for new insurance!
First step-figure out how not to use credit cards.

Does daughter have a job? Helping adult kids is one thing-supporting them another.

Suggest you get Dave’s book/podcast, etc.
You need a budget and a plan.

Perhaps extra jobs for a few months.
“Stressing” changes nothing-a solid plan does.

[Michelle]

You didn’t share all your debts and interest rates, nor did you share if you have an emergency fund.

Also, do you get cheaper insurance if you pay for it for 6 months at a time versus monthly?

[Christine]

Just strive to not add/use that credit card anymore!! The higher interest rates are killers.

I went paperless, hang laundry to air dry, we’re doing minimal Christmas and birthday gifts with a bit of focus on needed items and second hand or handmade, keeping our heat lower…. the small amounts really do add up and help.

Can either, or both of you, do plasma as a side hustle for a while to cover the gas or part of the groceries?

[Lila]

Pay your credit cards first. You only have 7 payments left on the car and with your low payment, it’ll be paid off before you know it.

Credit card may take yeats,especially depending on your interest rate.

Put some in savings.

[Holly]

do it – pay off the car, insurance till may – take that money and use snowball way to work on paying off the rest of your debts – dont add anymore to the credit card debt work on paying that off.

You can do it !! put the credit cards away.

use cash only easier to stop yourself from spending if you have to pay cash for things – it is so much nicer will less or no debt!!

[Joyce]

I would pay credit card off first as that usually has the highest interest rate.

[Sarah]

I would pay off the car and insurance then save up a month worth of bills and groceries, things that you have to pay monthly using that extra 535.

Most finance people say only save 1k but doing so won’t really help out.

I just had tires and brakes unexpectedly and paid 2k. Still had to add 1k to my credit cards due to it.

By saving up on months worth of funds it could help with a lot of unexpected costs. For my household it would be 2500 in a savings.

Then I would turn thar extra 535 to the lowest balance credit card and attack that.

If they are all similar amounts find the highest interest and attack that one since it would save you the most money.

[Brenda]

Might make a better dollar difference if you waited til insurance renews and pay it in full then.

[Marybeth]

Ask your car insurance company about paying a single premium rather than monthly. I save about 10% by doing that, which is more than one month’s premium.

But you’ll need to save for that single premium because it is a chunk of money.

[Belen]

Your plan sounds good, in the right direction, and I did the smallest to largest like you said and it worked out perfect for me.

[Callie]

Do you have any emergency savings? I think Dave Ramsey said you need at least four months rent/mortgage payments in the bank in case anything happens, and THEN to pay off things with extra money from there.

Others say put a thousand in savings and then use the rest to pay off debts.

How bad is the interest on your cards and how much is it gouging you each month and what’s the balance (not actually asking, something for you to look at).

If you pay your car off early, you will be releasing yourself from the extra interest that is tacked into your car payment (you owe and are paying more than the balance, so check what your balance might be instead of adding up the seven payments, it’s probably lower because you’re paying back interest along with your car’s total).

I would agree with others that it might be the CC debt that needs paid off, just because you’re paying so much more for that per month than your car.

[Carolyn]

Find out if there’s a refund for early payoff. Take that refund to pay on cc.

1. Take the full amount of the monthly (paid off) car payment and add it to whatever amount of pymt you are currently paying on the next cc and apply it all to the smallest cc balance.

It’s proven that gratification motivates us to continue a plan.

2. After the lowest cc is paid in full, Take the full pymt amount, add it to the current pymt and pay off the next cc.

Keep rolling the money to the next pymt plan for cc or any loan.
Good luck you can do it….

[Brenda]

I think your idea is best. Payoff smallest to biggest regardless of rate. I’m debt free now doing the snowball that way and it’s very motivating as you see the payoffs quickly.

You should have an emergency fund if $1000 first though.

That way you aren’t charging more if something comes up.

[Taralyn]

As a financial coach, I recommend the Fourths Method. A fourth to debt, a fourth to emergency savings, a fourth for goal savings, and a fourth for whatever your heart desires.

Pay off the highest interest rate debt to make your money work harder.

[Cindy]

Congratulations on the bonus!
Remember half of your bonus goes to taxes before thinking of spending any of it.

Then I’m in favour of putting money on the cc’s.
If you have any left then maybe the car payments.

And if you still have any left then save the rest for a rainy day.

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