Have $500 to pay off some debts, which ones first?

[ilovediznee]

I've never posted anything like this, but I've written replies to those in similar situations and now I need my DIS boards family help.

I've been trying to pay down many, many, many medical bills and others, but mostly medical, since I had my hysterectomy in November 2008. My mom has graciously sent me $500 to put towards my bills. I know in general the response is always "pay those down that have the highest interst rate" but I also need to see an impact on what those amounts paid off will be give me as far as extra money to put towards something else to pay the rest down.

They are:
Radiologist - balance $67.00 - pay $10.00 per month now - 0% interest
Radiologist II - balance $134 - pay $20.00 per month now - 0% interest
Pediatrician - balance $65 - pay $5.00 per month now - 0% interest
ICR (bank) - balance $272.09 - pay $10.00 per month now - 19% interest
Bill Me Later - balance $301.75 - pay $10.00 per month now - 19% interest
OB-GYN - balance $290.25 - pay $15.00 per month now - 0% interest
Hospital 1 - balance $360.44 - pay $30.00 per month now - 0% interest
Hospital 2 - balance $546.99 - pay $25.00 per month now - 0% interest

My thought is: pay pediatrican, radiologist and radiologist II and also ICR since my bank will start charging for even having an ICR starting 4/1/10. That will also eliminate 4 bills and increase my monthly cash flow an extra $45.00 per month that I can apply to another one (like the snowball effect). With so many, even though I have a spreadsheet, I have forgotten one or two and then have a late fee that I don't want to incur anymore.

Just the thought of reducing 4 bills would be such a relief!

Please give me your thoughts.

Thanks - Diane

 

[Muushka]

Oops, as I re-read your post, what is an ICR?

 

[CherylA]

I've never posted anything like this, but I've written replies to those in similar situations and now I need my DIS boards family help.

I've been trying to pay down many, many, many medical bills and others, but mostly medical, since I had my hysterectomy in November 2008. My mom has graciously sent me $500 to put towards my bills. I know in general the response is always "pay those down that have the highest interst rate" but I also need to see an impact on what those amounts paid off will be give me as far as extra money to put towards something else to pay the rest down.

They are:
Radiologist - balance $67.00 - pay $10.00 per month now - 0% interest
Radiologist II - balance $134 - pay $20.00 per month now - 0% interest
Pediatrician - balance $65 - pay $5.00 per month now - 0% interest
ICR (bank) - balance $272.09 - pay $10.00 per month now - 19% interest
Bill Me Later - balance $301.75 - pay $10.00 per month now - 19% interest
OB-GYN - balance $290.25 - pay $15.00 per month now - 0% interest
Hospital 1 - balance $360.44 - pay $30.00 per month now - 0% interest
Hospital 2 - balance $546.99 - pay $25.00 per month now - 0% interest

My thought is: pay pediatrican, radiologist and radiologist II and also ICR since my bank will start charging for even having an ICR starting 4/1/10. That will also eliminate 4 bills and increase my monthly cash flow an extra $45.00 per month that I can apply to another one (like the snowball effect). With so many, even though I have a spreadsheet, I have forgotten one or two and then have a late fee that I don't want to incur anymore.

Just the thought of reducing 4 bills would be such a relief!

Please give me your thoughts.

Thanks - Diane

Exactally what you said, pay off the smallest ones first then every month use what you would have paid towards those toward the next highest bill. The snowball effect works! Just be sure to really roll that 45/mo into the other bills on top of what you were already paying. It will be nice for you to not have to write so many little checks each month too. What a pain!

 

[sksjasams]

I like your plan! It will feel great to knock out 3 of the small ones plus one of the bigger ones with a high int rate.
You have been doing a great job getting your balances so low already that the int rate really isn't that big of factor at this point.
You can always roll your extra $45/month into the payment for the other one with high interest and you will have that paid off in no time too.

Good luck!

 

[RadioFanatic]

personally, I think it would be smarter to pay off the two with the horrifically high interest rate as you would be saving a ton of money in the long run.

 

[sksjasams]

personally, I think it would be smarter to pay off the two with the horrifically high interest rate as you would be saving a ton of money in the long run.

Not really...with OP's plan she will be paying off one of the ones with the high int rate and rolling the extra $45/mo towards the other one with the high int rate. Even with the balance now of $301, her int is only $4.78 per month. She will be paying $55/mo towards that bill, so each month that amount of interest ($4.78) will decrease even more too. She will have that other high int rate one paid off in just a few months.

 

[ICF]

Not really...with OP's plan she will be paying off one of the ones with the high int rate and rolling the extra $45/mo towards the other one with the high int rate. Even with the balance now of $301, her int is only $4.78 per month. She will be paying $55/mo towards that bill, so each month that amount of interest ($4.78) will decrease even more too. She will have that other high int rate one paid off in just a few months.

but why pay ANY interest? That wouldn't seem to make sense to choose to pay off a 0% balance while still carrying a 19% one, regardless of how little interest is going to accrue month to month.

 

[sksjasams]

but why pay ANY interest? That wouldn't seem to make sense to choose to pay off a 0% balance while still carrying a 19% one, regardless of how little interest is going to accrue month to month.

I know what you mean, but with OP's plan she will be freeing up $45/mo to go towards other bills, instead of just freeing up $20/mo if she paid off just the two bills with higher interest rates. That will allow her to pay off other ones more quickly. I think that makes sense if you are looking at the big picture...

 

[ilovediznee]

Thanks for the responses.

For the person who wanted to know. An ICR is an Instant Cash Reserve. That is on my checking account for overdrafts.

If anyone has any other ideas, let me know.

Di

 

[VAN]

Get rid of the 19% interest ones first. Then start on the smallest (making sure you are paying the minimum monthly on the others).

Do you have any items that you could sell to make extra money? What about earning extra money? Any opportunities?

 

[CinRell]

personally, I think it would be smarter to pay off the two with the horrifically high interest rate as you would be saving a ton of money in the long run.

I totally agree!!!!! I know the snowball plan or whatever it's called is to pay off lowest balance first but heck... 0% or 19% sounds like a no brainer to me to get rid of those 2 19% ones!!

Good luck and congrats on being able to knock off some debt!!!

 

[luvsmickeymouse]

personally, I think it would be smarter to pay off the two with the horrifically high interest rate as you would be saving a ton of money in the long run.

This is what I would do. Then take the $20 from these and put it on the bill with the lowest balance and keep going from there.

 

[Irin997]

Aren't you technically freeing up more than $20 considering the fact that you are now paying $10 less per month in interest?

I used a quick debt payoff calculator and here are the results for all of your debts currently:

• By making minimum payments only, it will take you 3 years and 5 months to pay off your credit cards.
• Based on your current combined balance of $2,037.52, you will pay a total of $181.98 in interest.

Total to pay: $2219.50


Using your scenario, this is what happens:

• By making minimum payments only, it will take you 2 years and 1 month to pay off your credit cards.
• Based on your current combined balance of $1,499.43, you will pay a total of $39.58 in interest.

Total to pay: $1539.01


By paying off the high interest debts first, this is what happens:

• By making minimum payments only, it will take you 2 years and 2 months to pay off your credit cards.
• Based on your current combined balance of $1,463.68, you will pay a total of $-0.00 in interest.

Total to pay: $1463.68

So in the end, you save about $75 by paying off the higher interest debts first.

Of course these calculations aren't necessarily perfect, but it's a good indicator of what can happen. Personally, I'd pay off the 19% interest first. You can never go wrong with 0% interest.

Good luck OP.

 

[apnep]

I would pay off the first 4 bills which will knock out one of your 19% rate debts.

Then I would pay off that other 19% debt. You have to get rid of that pronto.

Getting rid of 4 of your bills will also help you to build confidence, feel like you're accomplishing something and keep going.

I'd also call the hospital and ask if they can give you a discount, and they can. Sometimes they will discount up to 20%.

Good luck!

Ang

 

[wdwfan16]

I've never posted anything like this, but I've written replies to those in similar situations and now I need my DIS boards family help.

I've been trying to pay down many, many, many medical bills and others, but mostly medical, since I had my hysterectomy in November 2008. My mom has graciously sent me $500 to put towards my bills. I know in general the response is always "pay those down that have the highest interst rate" but I also need to see an impact on what those amounts paid off will be give me as far as extra money to put towards something else to pay the rest down.

They are:
Radiologist - balance $67.00 - pay $10.00 per month now - 0% interest
Radiologist II - balance $134 - pay $20.00 per month now - 0% interest
Pediatrician - balance $65 - pay $5.00 per month now - 0% interest
ICR (bank) - balance $272.09 - pay $10.00 per month now - 19% interest
Bill Me Later - balance $301.75 - pay $10.00 per month now - 19% interest
OB-GYN - balance $290.25 - pay $15.00 per month now - 0% interest
Hospital 1 - balance $360.44 - pay $30.00 per month now - 0% interest
Hospital 2 - balance $546.99 - pay $25.00 per month now - 0% interest

My thought is: pay pediatrican, radiologist and radiologist II and also ICR since my bank will start charging for even having an ICR starting 4/1/10. That will also eliminate 4 bills and increase my monthly cash flow an extra $45.00 per month that I can apply to another one (like the snowball effect). With so many, even though I have a spreadsheet, I have forgotten one or two and then have a late fee that I don't want to incur anymore.

Just the thought of reducing 4 bills would be such a relief!

Please give me your thoughts.

Thanks - Diane

I would pay off the "Bill me later" since it is at 19%. And put the rest on the ICR. That will bring the ICR down to $72.09.

Now start to pay $20 each mont to the ICR until it is paid off. If you can put a little more you can have it paid off in 4 months with the interest.

Then pay the Pediatrician off. At this point you should only owe $25. Put the extra $5 and any other you can get on the Radiologist bill. At this point you should only owe $17. It will be paid off. Keep doing this.

 

[ilovediznee]

Thanks everyone! Let me address a few questions that people had:

-an extra job or earnings - I am already working FT and PT to pay these off so no, no more options at this time, however I am listing a number of items on our classified section at work.
-regarding a discount - I used to work at that hospital and now another one. They won't give us any discount for paying the whole thing off - they need the money too.
-I believe, at this time, I am going to do my original plan of Radiologist, Radiologist II, Pediatrican and ICR. Remember that I stated that my bank will start charging for even having an instant cash reserve starting April 1 so I need to act on it now and not incur even more I owe.
-going back to the PT job issue, I am working an extra shift a week so I work 3 evenings one week and 2 the next. That is in addition to my FT job, our DD (9), husband that travels, etc. I am running thin and this is about all I can do. If food wasn't an issue (which we've really cut down on as well), I could pay more.
-Last thing - FYI - I get an extra paycheck in July (3 pay periods) so even more will be paid off!

Keep any more thoughts coming as I love to hear what others think and thank you so much - god bless - Diane

 

[maggieusa]

To the op I think you are doing great .Good LUCK

 

[ilovediznee]

What is OP?

 

[sksjasams]

What is OP?

Original Poster - you

 

[RadioFanatic]

but why pay ANY interest? That wouldn't seem to make sense to choose to pay off a 0% balance while still carrying a 19% one, regardless of how little interest is going to accrue month to month.

I agree.