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Income tax in, what to pay off?

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Highway61
New Member

Income tax in, what to pay off?

Alright, so I got a little more back on my income tax than I expected because of the American Opportunity Credit.. I got back about $2,400. I figured I'll use this to pay off some debt and lower my monthly expenses.

 

Here's what I'm dealing with:

 

Capital One - $414 balance / $500 limit . ~19% interest

Citi - $2,971 balance / $5,000 limit ~ 14% interest

Personal loan/car - $1,400 balance ~ 13%

 

My plan is to pay the Capital One down to a low ($20 - $25) balance.

The Citi down to a ~$900 balance, and wean that down to ~$200 balance over the next few months.

Pay off the car loan completely, and in doing so also be able to downgrade my insurance from full coverage ($120 a month) to just liability (~$44 a month). Since my insurance plan expires in 2 months, I would have to pay off my loan fully in that time to make the change to liability. Otherwise I would just work on the loan in bigger chunks.

 

Does this seem like a good plan? I will have to dip into my checking a bit to pull it off but it's do-able.

Message 1 of 6
5 REPLIES 5
Revelate
Moderator Emeritus

Re: Income tax in, what to pay off?

It works, but out of curiosity what's the rationale for leaving any balance at all on the Cap 1 card?




        
Message 2 of 6
GFer
Valued Contributor

Re: Income tax in, what to pay off?

If it were me, I would definitely pay the Cap1 off completely.



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Message 3 of 6
Noctilum
Frequent Contributor

Re: Income tax in, what to pay off?

I'd pay off both Capital One and your auto loan.  Then put the money free'd up from your car payment and insurance towards paying off Citi ASAP.

Message 4 of 6
MadDscientist
Member

Re: Income tax in, what to pay off?


@Corvidae wrote:

I'd pay off both Capital One and your auto loan.  Then put the money free'd up from your car payment and insurance towards paying off Citi ASAP.


+1

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Message 5 of 6
Chris679
Established Contributor

Re: Income tax in, what to pay off?

If you pay off the full balance of Cap One you can use it for purchases and still have a grace period. If you don't then you start paying interest as soon as a charge is posted.
Message 6 of 6
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