Recieved bonus at work ... what bills do I pay with it?

[Anonymous]

Advice and guidance please!

I received a $3,577.05 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.  Also I am self employed so will have to pay SE tax, not yet sure how much it will be.  My accountant is working on it now. 

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:

Mortgage on Primary Home, 10.25%, $70,501.95 - trying to refinance now, have had for 1 years 9 months, $50,000 equity

Mortgage on Rental Home that I'm stuck with until the market improves - 8.125%, $151,625.98. will try and refi after Primary Home, have had loan 2 years 9 months, $250,000 equity

Car Loan, 14.64%, $15,000 balance, I've had it for 8 months and would love to refinance it, it was a used vehicle and is probably worth about $15,000

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

Sears 20.40, $0 Bal, $500 CL, Had since 1996

Target 20.99%, $0 Bal, $200 CL, had since 2008

Crown Jewelers $0 Bal, $2,500 CL, had since 2008

I have 2 "bads" showing on my CR, I have never been late on anything other than #1:

1.) My rental house mortgage was showing 120+ days late 2 years ago due to a banking error, I have sent several GW's but no positive responses as of yet, but I'll keep trying

2.) Palisades Collection for AT&T 6 years ago, paid in full but showing as settled in full on EX & TU, removed from EQ.  My attorney (who took case on contingency) reached a settlement with them for a small sum plus promise of removal from my CR, but it is not yet finalized.  So in theory, this should be off completely within a few weeks.

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 vet and an equipment supply place 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!

[llecs]

Ideally you need to save roughly a third for taxes. If you got back or you think you may get back a refund of $1100 or so for 2008, then you really wouldn't need to save it, unless you think your tax situation may change for 2009.

If my FICO score was the priority, then I would take the $2400 and apply it towards items on my report that are fixable and hurting the most or has the potential to hurt the most. I'd pay the vet and the equipment supply place first. A New CA could easily drop you 100 points. Let's say that leaves us with $1900. I'd pay Discover $200 ASAP. That leaves $1700. The rest I'd pay down equally percentage-wise and I'd include in that Chase, CapOne, Discover, Amex, and BofA. All together you may net about 20-30 points.

I'd scrimp and save and continue your paydown and I would also stop using the CCs. Be agreesive with the paydown. Ideally, you'd want 1/2 reporting $0 and the other half with a balance of less than 9%.

Keep sending the GWs for the mortgage and the CA.

If you don't need to save for taxes, then throw that to reduce the percentages equally.

[Anonymous]

so you would pay a percentage off of everything rather than paying off Discover and Capital 1 completely, with the remaining $600 payed out to Chase, AMEX and BofA?  I thought that the FICO looked heavily on the number of cards with balances?  Or am I wrong?

[Anonymous]

(This is all assuming that I'm not going to be stuck with a huge tax bill of course!)

[llecs]

Normally I would suggest getting more CCs to $0 but your individual utilizations on those 5 or so CCs are so high I believe you are being dinged extra for it. You do have a bonus in tht you have the other 3 store cards at $0 and that really helps. Moreover, Chase, BofA, and Amex are CLDing many. You are a prime target with those balances and paying them lower would certainly help reduce that threat. While Chase is lower they do ARs and can see your other accts.

[Anonymous]

when you say "pay down equally percentage-wise", can you please clarify for me what that means?  Do you mean (for example) if I had that $1,700, I would divide that equally between the 5 cards ($340), or do you mean pay something like 15% of each balance? 

Also I already paid Discover $350 from my paycheck yesterday due to being over the limit.

Thank you!

[llecs]

Percentage-wise (for lack of a better term I guess) would be the utilization percentage. Forcus first on getting each individual CC below 90% utilization. Then 80%, then 70%, and so on.

[Anonymous]

so for example, here are my percentages now ...

Capital 1 is at 88% Balance $1,100, CL $1,250

 

Discover is at 64%, Bal $450, CL $700

 

AMEX is at 98%, Bal $4900, CL $5,000

 

Husbands B of A is at 98%, Bal $2,450, CL $2,500

Should I maybe be focusing on just Capital 1, AMEX and BofA to get their percentages down ASAP? 

If I was shooting for 80% UTIL to start with:

AMEX is $4000, so I would pay $900.00, BofA is $2,000, so I would pay $450.00, Capital 1 is $1,000, so I would pay $100.

That has me paying $1450, and all of my cards would be at or under 80%.  Or am I screwed up somewhere?

And I guess I don't understand what you mean about my Chase card ... it is at 38% now ... can you explain to me why should I be worrying about paying that one down when the others are so high?  There is so much to learn and know, I really appreciate the help

[llecs]

Chase doesn't like to see high balances (in relation to the CL) on your other CCs. I'd pay the higher util cards first. But Chase, Amex, and BofA will look at each others balances and are actively CLDing folks. Just read one where BofA slashed two CCs one member had by a total of several thousand. I bet it hurt his util and score in a big way. (And his balances were relatively low too).

You did your math just fine if you want it at 80%. If you have more $$$, then aim for 75% or 70% or below if possible. You are on the right track.

Message Edited by llecs on 02-20-2009 02:05 PM

[Anonymous]

Thanks for the help, I went ahead and paid my AMEX ($1,000) and Cap1 ($200) as their closing statement dates are within the week.  I'll pay $500 on BofA next week, and will re-evaluate Discover and Chase in a couple of weeks depending on the tax situation.

I am HOPING that the bank I talked to last week WILL be able to refi my primary home, he said he'd have an answer for me this afternoon or Saturday mid morning.  If he can refi me, plus give me a bit of cash out for the construction repairs at my house (that this bonus was supposed to go for), then I could start hoping to see a light at the end of the tunnel.  And after that refi goes through, I'd be able to tackle refi'ing the rental house, then the cars.

It is so nice to start having positive credit issues, hard work and sacrafice DOES work!