What should I pay off with my tax refund??

[concerned]

Hi All:

I am trying to rebuild my credit post bk, which was over a year ago. My score has risen remarkably, but I recently experienced some medical problems and my credit cards are currently maxed. I have enough of a tax refund coming to pay them all off in full, which I originally intended to do, but I am now wondering if it is best to pay these off or something else. My fiance wants to buy a home for us in his name. He still owes on his truck & paying the truck off would help free up more of his credit and help him buy the house with a better interest rate. My thought was to roll my balances on a 0% card until next year's tax return and then pay them off. Will doing so hurt my credit? Should I just stick with my initial plan? Will my score improve once all the credit card balances are zero??

Thanks,
concerned

[Bandit]

If that were me I would pay off whatever the highest interest is first & totally get that out of the way which is probably the medical bills on charge cards.


& since there are no guarantees in life or relationships, then maybe pay some of the truck off on the 0% card. i think that is just awesome that you have a 0% interest offer only one year out of BK, so look out for yourself first! I don't mean that in a selfish way because obviously you are not selfish as you are willing to put your fiance before yourself, but seriously don't forget about you too. Remember health insurance & to get that unless you already have it or will get that through your spouse or employment.

Next time if there is one (let's hope not) if you can help it, work out a plan with your doctor or hopsital where you put up a downpayment & pay the medical bills a different way than charge cards. Most doctors will work out a payment plan with their patients.

As for the score improving, I am not sure if rolling a balance transfer will do that, but paying it off (or most of it off) certainly will. To improve it, I would pay the current cards off, then use one of them higher interest afterward for the truck, then balance transfer that loan to the 0% interest offer before they can snag you with interest. It might take about two months to go thru the whole juggling act to make sure you don't bury ANY left over high interest charges. That will help improve the score more than balance transfering the current medical bills. (I think)
Get all the cards to zero, then start over with a new balance. See what I mean?

They tend to look more at a ratio of debt to revolving credit, how quickly it is paid back etc., more so than what your interest rate is. Then those banks will give you more offers at low interest because that is how they play this game.

That is My 2 cents, but someone else can double check to see if I caught all the bases.

[krielly]

I agree, pay off the highest interest cards first.
What about doing this:
A. Pay off the credit cards as originally planned
B. Make extra payments to the principal on the truck loan with the money you are no longer having to pay on the cards each month
C. if possible, take some of the money from B, and put a bit aside each month towards buying a house
D. Take NEXT years refund and buy a house together.

I would try to have as low of a debt to income ratio as possible when you buy the house. It's good to have a cushion, because as any homeowner will tell you, extra expenses for repairs, etc.....can really catch you off guard. You may also want to set aside some of the funds from C towards future unexpected medical expenses as well.

K

[emoney]

Two things I would do first, lower your withholding and stop giving the government an interest free loan. Next start paying of your debts from the lowest to highest. This way you get the emotional high of paying off your debts, and you will feel good every time.

You are asking for a hard fall if you buy a home together. That is something married people do. What happend when you seperate, as over 80% of persons who live together before marriage do.
regards,
emoney

[stljohn]

rolling balances and keeping cards open was the start down the slippery slope for me. just an observation you may be different.

agree with emoney. more people get burned mingling money before marriage. law doesn't recognize people playing house. when a guy buys a house in his name its his house not "ours". single people mixing money aint smart, take care of your own.

consider paying off highest int card and reduce the utilization on the rest. improves your credit, pitch to BF now you will be able to be help finance the house at a better interest rate. then you have legal standing. let him handle his truck.

[CindyLou]

Until he is your husband, you do not share debts. Take care of yourself and make sure YOUR credit future is bright.

If you pay off his truck then something doesn't work out, do you really think he is going to be able to write you a check and pay you back? Nope, because now he has a mortgage to pay. By the way, then you are living in HIS house..and HE has a paid off truck. And what do you have? A butt load of credit cards bills!