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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.



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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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Im just going to use my taxes to pay some of my debt from my other card which is bank of america with a 3.9k balance on it so if I apply the 2.6k on it then I will have left 1.3k left on it. I pay to much on my car anyways paying 600 instead of the 450 they are asking me to pay but I only got 8.2k and as soon as they take this pay it will be 7.6k

Edited by helpmeout

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It would help people give you good advice if you could list the approx. balances on each CC along with the APR on the CCs. Also, what's the APR on your auto loan? It's usually much less than CCs so if that's the case you will save money paying the CC debts first. It could make a big difference in how much money you save. But we need the info to provide the best advice.

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13 hours ago, helpmeout said:

Im just going to use my taxes to pay some of my debt from my other card which is bank of america with a 3.9k balance on it so if I apply the 2.6k on it then I will have left 1.3k left on it. I pay to much on my car anyways paying 600 instead of the 450 they are asking me to pay but I only got 8.2k and as soon as they take this pay it will be 7.6k

Unless it is causing you to have deficiencies elsewhere, there is NO such thing as 'paying too much' on the car note.  It is the sort of thing that one should ALWAYS be striving to pay off as soon as possible given the nature of the depreciating asset.  The sooner you have it paid off, the better off you will be.  And it is not an amount they are 'asking' you to pay...the $450 is the contracted monthly payment that you agreed to...however, nothing precludes you from paying more and ensuring the overage goes to principal. 

 

From multiple replies you have made in this thread alone, it appears you would do well to find a good book dealing with personal finances.  There are far too many simple concepts about personal financial issues that you seem not to understand.  Getting a grip on those issues will greatly aid you as you move down this road we call life...

 

You don't indicate whether the BofA card is the ONLY credit card you have with a balance of any sort.  Further, you don't indicate what sort of savings you have (or retirement beyond a brief reference to a 401K).  Just because you have the refund coming in does not mean you need to immediately make some manner of corresponding out-flow of funds.  Take a figurative moment to breathe and form a plan.  THEN move the funds to the appropriate locations...

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35 minutes ago, centex said:

From multiple replies you have made in this thread alone, it appears you would do well to find a good book dealing with personal finances.  There are far too many simple concepts about personal financial issues that you seem not to understand.  Getting a grip on those issues will greatly aid you as you move down this road we call life...

This is something that is lost on far too many people.

Edited by IndyPoolPlayer

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On 2/6/2019 at 9:35 PM, helpmeout said:

What do you mean by adjust? Fix what?

talk with your HR department.  Every company I've worked for in my professional career has an online HR portal where you can adjust your withholding (how many exemptions you claim, etc) to try and get more $ into your normal paycheck.

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23 hours ago, centex said:

Unless it is causing you to have deficiencies elsewhere, there is NO such thing as 'paying too much' on the car note.  It is the sort of thing that one should ALWAYS be striving to pay off as soon as possible given the nature of the depreciating asset.  The sooner you have it paid off, the better off you will be.  And it is not an amount they are 'asking' you to pay...the $450 is the contracted monthly payment that you agreed to...however, nothing precludes you from paying more and ensuring the overage goes to principal. 

 

From multiple replies you have made in this thread alone, it appears you would do well to find a good book dealing with personal finances.  There are far too many simple concepts about personal financial issues that you seem not to understand.  Getting a grip on those issues will greatly aid you as you move down this road we call life...

 

You don't indicate whether the BofA card is the ONLY credit card you have with a balance of any sort.  Further, you don't indicate what sort of savings you have (or retirement beyond a brief reference to a 401K).  Just because you have the refund coming in does not mean you need to immediately make some manner of corresponding out-flow of funds.  Take a figurative moment to breathe and form a plan.  THEN move the funds to the appropriate locations...

I have a balance of 

3.8k on my Nrewards visa 17.24%

6.8k on my visa platinum 18.00%

2k unused on my checking line of credit 16.90%

6.1k on my chase 12%(I closed it due to high rediclous interest rate which was 24%. My 3 navy lines are better as you can see with a fair interest rate so I didn’t need chase anymore.

4.1k on my discover 19.99%

3.6k on my BOA with probably 25%?(forced closed on me due to missing 2 payments and return check fee) but that was in November.

$732 on my Best Buy(interest free)

And now I have a 7.6k balance with a 6.19% on my car loan left to pay.

i rounded up my payments up other then my Best Buy and my car loan. Now I do have a saving of 1k in my saving and I do have a 401k. I just paid 300 more on the Bank of America so now it’s going to be 3,547 and once I pay it with the 2k it will be 1.5k left.

Edited by helpmeout

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So Chase was a "high ridiculous interest rate" but you had no qualms about keeping a BofA account with an even higher APR?  NONE of those are good rates save for the store card with a short-term no-interest offer (which I am guessing will back-end you with an addition of the accumulated interest if not paid in a timely manner).

 

You don't list what the lines are on each of those accounts.  However, it would behoove you to call and inquire about an APR reduction.  From there, you need to look at the possibility of doing some BT's to consolidate.  You won't screw your scores up any more than they already are since that many accounts with balances are sinking the score...remember that utilization looks not just at percentages in play on each card but also the ratio of cards to cards with balances. 

 

You have roughly $27.5K in outstanding credit card debt.  Worrying about where to put an oversized refund is NOT the biggest problem you need to get your hands around to control.  This is something that takes far more than just 'rounding up' to get cleared and zero'ed out.  In light of what you have listed, paying off the car actually moves way DOWN the list in terms of priorities. 

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48 minutes ago, centex said:

So Chase was a "high ridiculous interest rate" but you had no qualms about keeping a BofA account with an even higher APR?  NONE of those are good rates save for the store card with a short-term no-interest offer (which I am guessing will back-end you with an addition of the accumulated interest if not paid in a timely manner).

 

You don't list what the lines are on each of those accounts.  However, it would behoove you to call and inquire about an APR reduction.  From there, you need to look at the possibility of doing some BT's to consolidate.  You won't screw your scores up any more than they already are since that many accounts with balances are sinking the score...remember that utilization looks not just at percentages in play on each card but also the ratio of cards to cards with balances. 

 

You have roughly $27.5K in outstanding credit card debt.  Worrying about where to put an oversized refund is NOT the biggest problem you need to get your hands around to control.  This is something that takes far more than just 'rounding up' to get cleared and zero'ed out.  In light of what you have listed, paying off the car actually moves way DOWN the list in terms of priorities. 

They are all credit card bills other then my car and Best Buy store card which I would pay off before the interest hits. It’s not like I am dying paying my debt. That 2k that I have through navy federal is a checking line of credit which is somewhat like a personal loan which will draw out if my bank is 0 to cover the cost like let’s say I spent $100 and I only have $50. I will spend that $50 and the other $50 will be coming out of that line of credit so essentially if I wanted to pay off my BOA I could since I would only have to pay 1.5k once I get my taxes back. That checking line of credit is only 16.90% also.

Edited by helpmeout

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