What to do with tax refund?

[jetsfan2013]

My younger sister is expecting her tax refund to be deposited this week (approx $6400). She is in her late 20's and while just a few years in her career, like many, she is strapped with student loan debt from undergrad. Currently, she has two credit cards with combined balances of $5400 against limits of $13,500, and her student loan balances are approx $19,000. 

She is torn on whether she should throw this chunk of money on the credit cards or the student loans. She is aggressively repaying the student loans (started at 44,000), and believes she will be done with them in another year, however if she put this refund on the balance she feels she could be done by the end of summer.

Any suggestions?

[Remedios]

If she pays off those cards, which carry higher APR than student loans, she can throw extra money at student loans in the future and even further expedite the pay off while saving money.

I do have a question, if she believes she can pay $19K in two years, and has aggressively paid down student loans, why is she carrying balance on her credit cards? 

If she's getting herself into CC debt to facilitate SL pay off, she's doing it wrong. 

[Mv350]

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@Remedios wrote:

If she pays off those cards, which carry higher APR than student loans, she can throw extra money at student loans in the future and even further expedite the pay off while saving money.

I do have a question, if she believes she can pay $19K in two years, and has aggressively paid down student loans, why is she carrying balance on her credit cards? 

If she's getting herself into CC debt to facilitate SL pay off, she's doing it wrong. 

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+1 on this

I would pay down those CC's, and then the remainder toward the loans. 

[simplynoir]

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@Remedios wrote:

I do have a question, if she believes she can pay $19K in two years, and has aggressively paid down student loans, why is she carrying balance on her credit cards? 

If she's getting herself into CC debt to facilitate SL pay off, she's doing it wrong. 

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The only way I can see where it makes sense is if the credit card debt is on a current 0% intro offer or something similar like from a BT that's good til next year. If that's the case then it might make sense to throw the money at the loan and worry about the credit cards later. If not then take care of the credit card debt, be free of interest, and snowball the payments that were on the cards into the loan at that point like @Remedios suggested

[jetsfan2013]

Her admitted vice is shopping, which is why she has balances on her credit cards. 

[Remedios]

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@jetsfan2013 wrote:

Her admitted vice is shopping, which is why she has balances on her credit cards. 

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Well, then she's just moving debt from left to right, without a real progress. 

Advise her to pay off those cards, and add those payments to SLs.

Then, a nice lecture about how she could have used that money for better things (shopping included) had she not raked those balances might be in order (I'm half-joking, half-serious). 

Also, the fact she's willing to use refund for debt purposes tells me she's not a lost cause, so encourage her to pay off cards, and look for ways to keep her shopping habit in check. 

Major kudos to her for wanting to use refund this way. 

[AverageJoesCredit]

Pay off the credit cards and show her myFico forums on how to manage her credit cards. If i ever get to zero debt , cc use is pif always. Too easy to rack back up cc debt.

[Anonymous]

Another consideration is an emergency fund. Does she have one? If not, then one could be made from using part of that refund amount.

The recommendation is 3 to 6 months of expenses, but even $1,000 would be a good start. The rest of the refund could then go toward paying down debt. This would provide some wiggle room to prevent further debt when unexpected expenses arise.

[jetsfan2013]

She won't be receptive to a lecture imho.

[AverageJoesCredit]

Most here do not lecture but offer advise from personal experience. If a person does not want advice or at least not willing to hear some, its best to let said person to do what they want with their money and move on.