Debt: What would you do? *POLL*

[AquarianPath]

 

 

 Ok, hopefully this will make sense.

We have about 5k in savings and we'll be going down to Texas December 18 - 25. We'll need to rent a car because we have three boys and the cars that my FIL has won't fit us all.

Ok, so we have 5k in savings, we'll be getting a return come tax season. We have six large payments we make every month.

Car: 161 (we owe 4k total) 12 % interest

CC1: 180 (owe 2500) 7 % interest

CC: 100 (owe 300) 29% interest (it's in my name)

Sears: 45 (we owe 1900) (deferred interest)

Toys R Us: 50 (we owe 1400) 17 % interest

and GE Money: 100 (we owe 2700) (Deferred interest)

 

Ok, so here's my question. My DH and I are deciding what to do. I suggested we take out a personal loan with USAA at at a fixed rate (12%) and consolidate all of our debts. We're able to make these payments , it gets tight sometimes but we can do it. We're not in collections, we're not in any sort of trouble. I just want to get rid of those deferred interest and high interest credit accounts first.  We're coming to the end of our deferred interest period and I don't want to be smacked with the interest payments as well as our regular principle loan amount.

My DH wants to pay everything off with what's in our savings (5k) and what we get with our return (6-8k) However, this would wipe us out completely and we wouldn't have anything left in savings.

This also means we wouldn't have anything when we're in Texas. No safety net. I don't like having no safety net.

Which would you do?

Get a fixed rate unsecured loan to consolidate the debts and have ONE payment per month rather than 6. Plus our car would be paid off, which would be an equitable asset and we could lower the insurance on it. DH only drives it 4 miles each day to work and back. We would still have our safety net and we could repay the loan back within a couple of years if not SOONER.

Or pay everything off with our savings and return? Leaving nothing left in our savings account, nothing left for the Texas trip.

 

[AquarianPath]

bump.........anyone? 

[AquarianPath]

Bump.... whoever voted "other" mind sharing or giving me some suggestions? 

[Laura913]

pay it all off if you can, and do you have to go to texas??

[MsDean]

Pay off most of your debts but decide which debt is the least worrisome and leave that for another time.  Also anything you have in collections for a few months you can settle for less than what you owe.

[mom2four1978]

I think you should look into Dave Ramsey and the snow ball meathod. You could pay off some and save some (he recomends saving before paying). There are Dave Ramsey groups here on cafe mom.

[StrayMom]

I would pay off the highest interest ones with the savings IF I was able to still have a reasonable safety net for myself.  The job market is too unstable for you to have no savings.

If you will lose too much of your safety net, I would consolidate...then rip up those cards.

I haven't used a credit card in 4 years and its the best thing I ever did.  You don't always get what you want the minute you want it...but I am ok with that knowing I have no CC debt.

Now paying off these damn student loans is another matter...

 

[AquarianPath]

Quoting Laura913:

pay it all off if you can, and do you have to go to texas??

We already bought our tickets quite a few months ago. My MIL lost her mother and her sister within months of eachother. She hasn't spent a Christmas with her son (my DH) in 8 years...and my husband's father just got back from Iraq. He's home for good, he's been over there for 6 years.

So, it's definitely going to happen.

 

[AJmum]

 Personally, I would rather have no debt than tax money and a vacation.

[Phoenix_sp]

Quoting mom2four1978:

I think you should look into Dave Ramsey and the snow ball meathod. You could pay off some and save some (he recomends saving before paying). There are Dave Ramsey groups here on cafe mom.

[AquarianPath]

Quoting StrayMom:

I would pay off the highest interest ones with the savings IF I was able to still have a reasonable safety net for myself.  The job market is too unstable for you to have no savings.

If you will lose too much of your safety net, I would consolidate...then rip up those cards.

I haven't used a credit card in 4 years and its the best thing I ever did.  You don't always get what you want the minute you want it...but I am ok with that knowing I have no CC debt.

Now paying off these damn student loans is another matter...

 

Yep, we got all the things we needed. New car, new bed, new washer and dryer.

We can reasonably make our payments each month. However, now that we have what we need, we're going to close all those accounts. It may hurt our credit score, but we want to get rid of them.

With the economy the way it is, companies are jacking up their interest rates.