Payoff Strategies - Which order to pay?

[Anonymous]

Hello All - Long time listener first-time caller. I received a cash bonus from my job of 52k. I have the following debts:

IRS Back Taxes - (Currently on a payment plan for 142/m) 10k 

Care Credit - 6k

AA Executive Mastercard - 7k

Pelaton Bike (currently paying 70/m) - 2.6k

Navient Private Loan (42/m) - 1.5k  

I hope to purchase a house this year so want to use some of the funds for a cash down payment. How would you approach the above debt with 52k?

[Jnbmom]

First I would pay off that IRS debt. Then you could easily pay off the rest.

You will still have some left for down payment and be debt free😊

[Anonymous]

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@Jnbmom wrote:

First I would pay off that IRS debt. Then you could easily pay off the rest.

You will still have some left for down payment and be debt free😊

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Agreed. That IRS debt is most important, so you should pay that first. Good luck! 

[KLEXH25]

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@Anonymous wrote:

Hello All - Long time listener first-time caller. I received a cash bonus from my job of 52k. I have the following debts:

IRS Back Taxes - (Currently on a payment plan for 142/m) 10k 

Care Credit - 6k

AA Executive Mastercard - 7k

Pelaton Bike (currently paying 70/m) - 2.6k

Navient Private Loan (42/m) - 1.5k  

I hope to purchase a house this year so want to use some of the funds for a cash down payment. How would you approach the above debt with 52k?

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What are the interest rates on each? What other credit lines do you have without a balance? What's your income and DTI currently like (with all your payments)? My first instinct is to pay everything off and have no debt (except maybe the loan if that's your only loan). If your income is high, you can easily put your money towards savings and you won't be paying any interest. Plus check to see if any banks are offering bonuses for opening a HYSA. You can open a couple accounts with your left over balance and make some money and interest until you're ready to buy. 

[jetsfan2013]

IRS first, second, and third.

[Revelate]

Depends on the IRS debt APR.

An established payment plan won't derail a mortgage and my understanding is the current IRS APR's are similar to everywhere else currently: super cheap.

The other big question is how much home you are trying to buy and what your scores are: that'll determine how much you need for a downpayment and I would work backwards from that.

[tacpoly]

Pay off all debt then aggressively save for a 20% down payment before you take on a mortgage. 

Is it correct to assume you are paying off your credit cards in full every month and that your mortgage scores qualify you for the best terms?

[Anonymous]

DONT FORGET TO PAY THE TAXES FIRST ON THE CASH BONUS!!!

[SouthJamaica]

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@Anonymous wrote:

Hello All - Long time listener first-time caller. I received a cash bonus from my job of 52k. I have the following debts:

IRS Back Taxes - (Currently on a payment plan for 142/m) 10k 

Care Credit - 6k

AA Executive Mastercard - 7k

Pelaton Bike (currently paying 70/m) - 2.6k

Navient Private Loan (42/m) - 1.5k  

I hope to purchase a house this year so want to use some of the funds for a cash down payment. How would you approach the above debt with 52k?

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Me I would pay it all off.

[RSX]

I would pay it all off

but if you don't, I would save the IRS for last

1. int is prob 3-4%

2. It is hidden debt from the CR's.  Now if/ when you apply for a mortgage you will have to disclose it, so maybe pay part of it down now.