How to use my loan money

[Anonymous]

After much deliberation, I just applied and was approved for a debt consolidation loan.  I was hesitant to do this as the interest is higher than some of my debts but I could not live like I've been living any longer.  Previously, I had been told to grin and bear it because my current interest rates were lower than loans I could get but...I'm paying to so many places, barely covering interest because of that, it's like I'm standing still.  I have spent the last 6 years bare bones, with no savings account due to a lay off and medical debt and the credit debt I accumulated because of the other two reasons.  So, the second I've had an emergency expense (and there always seems to be an emergency expense), it goes right back on the credit cards I've been trying to pay off.  This loan will offer me more flexibility, if not savings.  Going forward, I have looked at how I can apply this loan from so many angles I am about to go crazy and could use a new pair of eyes as they say.  Please take a look and tell me how you suggest I apply the loan money?

As of right now, my debt is:

MC:  $11,400 CL: $11500, 9.9%, min. pmnt. $210

AX:  $1950, CL:  $2000, 17%, min. pmnt. $40

Disc: $1000, CL:  $1000 - $700 is at 0% for the next 5 months as part of a BT then it would go up to 23%, $300 is currently at 23%

Store Card:  $675, CL: $1000, currently 0% interest for next 5 months

Remaining loan on timeshare I bought before my lay off:  $830, 9%, min. pmnt. $33

Family loan for car repairs and more medical expenses:  $2700, my family has not been charging me interest but they are being charged interest on this so, I will pay this back first, regardless of the rate, more for my peace of mind.

My CS as of applying for the loan was 700.  The DC loan I received is for $7800 at 12% interest/14% APR for 3 years. 

Part of me thinks I should pay off the AX, the two loans, the store card and the $300 on the Disc. card and apply the remaining balance to my MC.  After that I could chip away at the 0% debts and then work on saving while applying any extra money to the loan first, then to my MC.  On the other hand, one reason I thought a loan would help was so that I wouldn't have to make 8 million different payments and it would immediately make available extra money every month.  If I paid off all but the MC with this loan, I would have $700 left at the end of the month to either save and/or apply to the loan and the MC balance.  If I took this second option, my next question would be, should I make minimum payments on the MC and the DC loan while saving for a while or should I split it right away putting some to savings, the rest to my balances? 

Sorry if this sounds convoluded.  Like I said, I've thought about this 10 million different ways because I want to make the right decision and my brain is fried.  I'm sure I'm probably over thinking this.  All I know is that having money left at the end of each paycheck to either pay down my debt faster, or save or buy myself a meal out for once is music to my ears.  Quite frankly, the stress relief alone from having this nominal amount of flexibility will be worth more than any loss I may take on the interest rate in the long term. 

Thank you in advance for your advice. 

[bettercreditguy1]

I'd take 10% put it in savings ($780.00), pay off Amex (minus payment one), pay off family, minus payment 2,  and leaves about 2500.00 cash. Then I would pay Disc. totally, minus payment three and place balance of cash funds on MC. This would free Disc and family for  future emergencies. The unknown here is how is your current cash flow/net income. The time share isn't an issue as it is so small, one mowing job/month debt payment is covered. Then I would focus on the other open balances and pay in full next, then finally kill the mc bill. Yes it may cost a few more in interest, however mentally, you would get a rush seeing the most accounts become current/zeroed faster.

[Anonymous]

This raises another question I have then.  Discover is offering me another 0% BT for 12 more months.  If I zero it out right away, would it be worth transferring $1000 from my MC and making minimal payments while I work on everything else?  Obviously, I would expect between getting the loan and then doing a BT that my CS would plummet but maybe it's worth taking a hit there all at once?  Will paying other cards off balance out opening a new account in terms of my CS? 

[Anonymous]

Assuming that the CS of 700 is a FICO score then you are not doing badly as far as that goes. And if the new loan is the only installment loan on your report then you may see a small point gain from that factor which will offset any new account ding. But the bottom line is that you need to focus your energy on paying off the accumulated debt and just let the CS take care of itself. By paying off a few of the reported balances then you are also doing what FICO likes to see.

Don't be late on any payments at least to the extent of 30 days or more as that will cause severe damage to your credit profile that takes a long time to recover from. As far as transferring some of the money to the Discover card it would result in a longer term savings on interest even though Discover is going to charge a fee for the balance transfer. But on the other hand it throws one more bill to pay into the cycle and as I understand that is what you are trying to do. Personally I would just leave the debt on the MC and pay as much above minimum as you can. The interest savings on a $1000 less the balance transfer fee is not really worth the aggravation in my opinion.

I am in the same boat of focusing on paying accumulated debt so I feel your pain and hope we are both learning a lesson.

[Jazzzy]

What are your plans for these credit cards going forward? You might want to cut up a few and not use them for a while. The danger...and I'm sure you know this...in a debt consolidation loan is that you run those credit cards back up. Then you have the installment loan plus the credit card debt. Be very careful...

[Anonymous]

Thanks everyone.  I actually found a debt repayment calculator on bankrate.com and was able to consider this a few different ways.  If I paid off everything but the 0% loans right now it would take me almost twice as long to pay off everything compared to paying all debts except the MC.  If all factors remain as they are and I pay everything but the MC I can repay that and the loan in 22 months.  AND it will allow me to start saving $300 per month beginning immediately.  I realize I have a ways to go still but I already feel some relief.  As far as what I'm doing with the cards, the answer is nothing.  But that's what I've been doing as they've been maxed out anyway.  I'm used to not using them.  The only reason I used them in the first place was out of necessity/emergencies.  Now I just have to remain optimistic that things will continue in this direction.