Author Topic: Credit card debt VS student loan  (Read 4013 times)

directionseeker

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Credit card debt VS student loan
« on: December 14, 2012, 04:02:17 PM »
Hi all,

I have been reading about priority on various debt on the blog but I believed my situation here a bit different.

I have a credit card bill of $1230 and student loan of $22k.

I have managed to strike a deal on my credit card bill to spread out the payment to  7 months($174 each) with 0% interest.

My student loan carry an annual interest of 4.75% that I think it is more urgent that the credit card bill.

Currently I have a saving of 10K and I plan to pay off the student loan in 6 months time which I am pretty excited about it. Knowing I will be debt free in 6 months time is such a good feeling that I just want to share with all of you guys here.

If you happen to read this topic, feel free to give me any advice or simply just write me a "YOU CAN DO IT, GO FOR IT!!" reply, and I will be grateful.

Self-employed-swami

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Re: Credit card debt VS student loan
« Reply #1 on: December 14, 2012, 04:08:42 PM »
I always pay highest interest debt first.  To figure out the total interest-cost of the debt, I always make sure to take into consideration, any tax benefits that might come from the interest, such as write-offs from student loan interest, or carrying costs of money borrowed to purchase investments.

Good for you!

deciduous

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Re: Credit card debt VS student loan
« Reply #2 on: December 15, 2012, 06:31:55 AM »
It sounds like you have a working plan, albeit an unusual one. Congratulations on almost killing those things off! Stay on target.

directionseeker

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Re: Credit card debt VS student loan
« Reply #3 on: December 15, 2012, 07:06:45 AM »
Thanks for the advice.

frugal_engineer

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Re: Credit card debt VS student loan
« Reply #4 on: December 15, 2012, 10:05:47 AM »
Just make sure that credit card is actually fully paid off by the end of your 0% interest period and your plan will be good.

TheDude

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Re: Credit card debt VS student loan
« Reply #5 on: December 15, 2012, 10:33:15 AM »
I don't think it matters much which you one you pay since you plan on being done with both of them in six months. I like the student loans mostly because they are above the line deductible. We have about $70 in student loan interest this year and by my calculations that was the last piece of the puzzle that put our AGI under 57500 thereby making us qualify for a savers credit.

directionseeker

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Re: Credit card debt VS student loan
« Reply #6 on: December 15, 2012, 05:25:02 PM »
Just make sure that credit card is actually fully paid off by the end of your 0% interest period and your plan will be good.

Noted on this. I sure keep a close eye on this one, I don't want to pay any interest on credit card.

directionseeker

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Re: Credit card debt VS student loan
« Reply #7 on: December 15, 2012, 05:26:28 PM »
I don't think it matters much which you one you pay since you plan on being done with both of them in six months. I like the student loans mostly because they are above the line deductible. We have about $70 in student loan interest this year and by my calculations that was the last piece of the puzzle that put our AGI under 57500 thereby making us qualify for a savers credit.

AGI? Savers credit?

Is this some US financial term? Do you mind explain to me on this because I never heard of them before here in Singapore.

Thanks

TheDude

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Re: Credit card debt VS student loan
« Reply #8 on: December 15, 2012, 07:28:07 PM »
Haha directionseeker. Yeah that's very US specific.

AGI = ajusted gross income its your income after a bunch of deductions like ira 401k HSA etc.

Savers credit is a credit you can receive if your AGI is low. Its designed to encourage people with low income to save for retirement.

I dont agree with tax code here (its really complicated and messed up) but you can use it your advantage if you take some time to understand it.

directionseeker

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Re: Credit card debt VS student loan
« Reply #9 on: December 15, 2012, 07:58:26 PM »
Haha directionseeker. Yeah that's very US specific.

AGI = ajusted gross income its your income after a bunch of deductions like ira 401k HSA etc.

Savers credit is a credit you can receive if your AGI is low. Its designed to encourage people with low income to save for retirement.

I dont agree with tax code here (its really complicated and messed up) but you can use it your advantage if you take some time to understand it.

Agreed with your opinion on the tax code. When it is complicated and messed up, it always means disaster for a group of people and opportunity for another group of people.

The AGI here in Singapore is simple to calculate, just take your salary and times it with 0.8, and it will be your AGI.

We don't have savers credit here but the government here provide Work Fare(certain amount of money) to old(more then 40 years old) low income earner.