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helpmeout

Taxes and paying off car or some credit card?

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So I will be getting at least 2.7k on my taxes and I plan to use 1.5k of that money toward my car payment then my car loan would drop from 8.2k to 6.7k and the rest I was planning on putting toward my credit card. Now my question is should I use that whole 2.7k towards my car or is the 1.5k enough. I started my car payment with 28k and now down to 8.2k wohoo but the reason I ask is because if I lose my job for any reason etc... then the bank to which I financed with can take away my car but with a credit card if I fall behind the worst thing is that it will just be on my credit report as late/delinquent. None of my payments are delinquent but I do have a one late payment on my credit report. Also I do pay more on my car then the minimum which is 450 but I pay $600 to finish of the loan faster because I do wish to get the title so no repo man will come and take my car. If I paid the minimum then I would not finish my car loan until 2022 or until the repo man comes lol but if I do pay all from my tax return then I could finish before even 2020 comes.

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18 minutes ago, hegemony said:

first move: adjust your W4 to avoid ever getting a "Refund" again

 

second, pay highest APR first. let FICO be damned.

I’m single and I am 24 but I make way to much money for myself according to the government so I have to pay a lot of taxes out of my income every month :( which is not great. I got around the same amount last tax return and the irs has never sent me a letter or anything.

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you're missing the point. that is YOUR money you could have had throughout the year to pay off debt faster.

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18 minutes ago, hegemony said:

you're missing the point. that is YOUR money you could have had throughout the year to pay off debt faster.

I do have a 401k through my employee but I am lost when it comes to taxes. How the hell can I make it so they don’t tax me to much on my taxes every month?

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adjust exemptions positively if you want less taxes withheld. just follow the instructions on the w4 and add an extra exemption or two, but remember that you might swing the other way and owe them.

ideally, you should adjust it to zero out.



Sent from my SM-N950U using Tapatalk

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9 hours ago, helpmeout said:

So I will be getting at least 2.7k on my taxes and I plan to use 1.5k of that money toward my car payment then my car loan would drop from 8.2k to 6.7k and the rest I was planning on putting toward my credit card. Now my question is should I use that whole 2.7k towards my car or is the 1.5k enough. I started my car payment with 28k and now down to 8.2k wohoo but the reason I ask is because if I lose my job for any reason etc... then the bank to which I financed with can take away my car but with a credit card if I fall behind the worst thing is that it will just be on my credit report as late/delinquent. None of my payments are delinquent but I do have a one late payment on my credit report. Also I do pay more on my car then the minimum which is 450 but I pay $600 to finish of the loan faster because I do wish to get the title so no repo man will come and take my car. If I paid the minimum then I would not finish my car loan until 2022 or until the repo man comes lol but if I do pay all from my tax return then I could finish before even 2020 comes.

I agree with the other posters about adjusting your withholding.

 

A properly-sized emergency fund (6 to 12+ months of total household expenses) dramatically reduces the chances of any of the negative outcomes you have outlined, so if you haven't put that much in savings I would make that an urgent priority.

 

Also note that car payments and having children are the two of the biggest self-induced impediments to a prosperous working life and a secure retirement.

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I'm on the W-4 adjustment bandwagon (to within a couple hundred bucks of owing or slight refund).  I'd take $100 extra a paycheck over 2.6k return any day and that's a valuable CB lesson that helped change my life.

 

I assume the APR on your credit cards far surpasses that of the auto loan.  The higher APRs should be the target for any over payments.

 

How's the budget for savings?  Is there wiggle room to increase as that would certainly lower the fears of the repo boogie man.

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Unless the car was purchased at a BHPH lot, then loss of job does not equate to a hook on the vehicle except and unless you quit making payments. 

 

Cessation of payments on a credit card can lead to far worse than "just" the derogatory reporting.  You WOULD be at risk of being sued and incurring the other issues that come with loss of such litigation.

 

There is generally no reason for an employed person to be getting a large refund.  As such, add me to the list of people recommending that you adjust the withholding so that you don't see refunds like that again.  A large refund means you let the government have YOUR money for free for the better part of the year.  There is zero reason to allow that to occur.  Some people cannot help it because of the things like Earned Income Credit or they may have had events during the tax year that were unique. 

 

From the personal finance standpoint, you want to clear the largest APR first.  For some people, that might be the vehicle.  For MOST, however, that is going to be credit cards. 

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