Author Topic: Which Debt to pay first with tax refund  (Read 2540 times)


  • Handlebar Stache
  • *****
  • Posts: 1391
  • Location: Chicago
  • You must change your life. -Rainer Maria Rilke
Which Debt to pay first with tax refund
« on: January 30, 2013, 09:40:33 PM »
Here is my question:
I have $3277 coming as our tax refund. I did my state online and mailed in my federal for direct deposit yesterday.

Right now, we have outstanding medical bills (the result of my broken leg and surgery, and my husband's hip replacement) of $2097.60
(There is also another bill for 2700$ that I am planning to contest, but havent done so yet, but anyway)

We also have 6800$ in credit card debt which I just balance transferred to a 0% interest for 12 months onto a card that was previously zero balance.

We also should expect approximately 5k in new medical bills this year, result of husband's very unfortunate heart attack two weeks ago and subsequent treatments.

I currently pay approx 300$ a month divided up to the medical bills (there are 4 accounts right now) and usually 1K a month to the cc debt. (sometimes more)

My thinking is, I should use the tax refund to pay off the current 4 medical bills totalling 2097.60

Neither debts are accruing interest right now. If I pay off the med bills, then I can add that 330$ to the monthly amt Im sending to the cc debt. I will also clear up those before getting new ones (some from the same drs and hospitals) so it may reduce confusion later on for me, as well as add to the amount of med. bill I paying this calendar year which will may?probably help me come taxes next year. ALso it will feel good to pay off 4 more debts completely.

I will still have 1K left extra to send to cc.

Is there any reason why it would be better to send it all to the cc now?
I should add that I havent added to the cc debt at all and have been very good at paying it down monthly and expect to get it paid off either way in the next 6 months, well before the interest would start.



  • Walrus Stache
  • *******
  • Posts: 7294
  • Location: Sydney, Oz
Re: Which Debt to pay first with tax refund
« Reply #1 on: January 31, 2013, 12:09:35 AM »
Have you thought about holding onto the cash?
If no debts are accruing interest then is there a need to actually pay them off faster than planned? (you seem to be paying them off pretty easily at the moment).

Would there be a psychological benefit in paying your husbands next medical bills cash upfront and thus not accruing further debt? Haven't taken into account the tax benefit you mentioned.

Just throwing out another option. Hope your husband recovers well.


  • Bristles
  • ***
  • Posts: 326
Re: Which Debt to pay first with tax refund
« Reply #2 on: January 31, 2013, 04:36:52 AM »
I would do the credit cards personally.  That debt will hit hard in interest when it comes due.  Just keep records for taxes.  This posting serves as a record--you knew in January what you had due from prior work. Anything new is new.


  • Handlebar Stache
  • *****
  • Posts: 2132
  • Location: Southern California
Re: Which Debt to pay first with tax refund
« Reply #3 on: January 31, 2013, 10:27:50 AM »
I'd pay off medical bills, save the $1000 for this years medical bills and up the monthly payment on the credit card.  (This assumes that you'll pay off the cc bills before the 0% interest is up or that you're confident that you can transfer to another 0% card.)


  • Pencil Stache
  • ****
  • Posts: 595
Re: Which Debt to pay first with tax refund
« Reply #4 on: February 04, 2013, 04:20:03 PM »
Ditto to what Mary said. Med bills first, then hold on to the rest.